YOU ARE HERE: LAT HomeCollections

Chip Maker Deal Spurs Security Review

November 01, 1986|From Times Wire Services

WASHINGTON — A pending merger between one of the country's major computer microchip makers and a Japanese semiconductor giant has touched off a Reagan Administration review of the possible implications for national security, officials said Friday.

The review to date has been kept low key and no decisions have been made on the possibility of attempting to block the merger between Fairchild Semiconductor and Fujitsu Microelectronics.

But the matter is considered "especially sensitive" within the halls of the Pentagon, to the point that Fairchild Semiconductor executives have already been called in to discuss the corporate plans, said one defense official.

That source and other officials, who agreed to discuss the matter only if not identified, said the U.S. Trade Representative's office as well as officials from various intelligence agencies have joined the Defense Department in studying the matter.

The concern arises because Fairchild Semiconductor, while not among the world's 10 largest chip makers, has carved out a special niche in a technology known as emitter-coupled logic. The so-called ECL chips are crucial to the operation of supercomputers and other high-performance systems, including computers that drive high-tech Pentagon weapons.

Fairchild Semiconductor is a subsidiary of Schlumberger Ltd., a New York oil field services firm that purchased the chip maker in 1979. Fujitsu Microelectronics is the U.S. subsidiary of Japan's giant Fujitsu Ltd. and is headquartered in San Diego.

Although both companies have declined to release many financial details of their recently announced deal, the planned merger would meld Fujitsu Microelectronics into Fairchild Semiconductor. Fujitsu would then assume 80% ownership of the resulting company and Schlumberger would hold the remainder.

In a related development, Fujitsu Ltd. officials are reconsidering plans to build a $130-million semiconductor fabrication plant in Gresham, Ore., because of the merger with Fairchild. Details, including whether to build in Gresham, will be worked out in a formal agreement between Fujitsu and Schlumberger, said Dan Garza, Fairchild's director of marketing and communications.

Garza said Thursday that a decision on the Gresham plant could be reached within 60 to 90 days but may take longer.

Los Angeles Times Articles