SAN FRANCISCO — In an innovative effort to defray the enormous cost of modern computer chip factories, Texas Instruments announced Thursday that it had enlisted the government of Singapore, Hewlett-Packard and Japan's Canon Inc. as partners in a $330-million chip-making joint venture.
The venture is one of the few American high-technology efforts in which a government entity is participating as an equity partner, and it is also one of the first to link a major chip vendor with major computer systems suppliers.
Many developing countries--and even some industrialized nations such as Ireland--have aggressively sought semiconductor investment on the grounds that chip-making forms a key part of an electronics industry infrastructure. In most cases, including a major Texas Instruments factory in southern Italy, incentives are limited to things such as tax breaks and infrastructure improvements.
Len Hills, an analyst with Dataquest, noted that the Singapore government had previously invested in a chip venture called Charter Semiconductor, and that the government of Taiwan holds a large share in a firm that produces chips for other companies. But he and other analysts said they did not know of any other such government investments.
Bob England, vice president of the semiconductor group at Texas Instruments, said the venture "goes along with a strategy we set some time ago to stabilize the memory (chip) business" by finding ways to share the investment.
TI's capital spending last year totaled $909 million, and is expected to stand at $575 million this year. The company has been losing money on operations, but has been able to finance investment with hundreds of millions of dollars in royalty income from patents.
The Singapore plant, expected to be in operation by mid-1993, will produce a type of memory chip called a dynamic random access memory, which must be produced very efficiently at very high volume to be profitable. The new factory will also "have the flexibility" to produce other types of advanced chips as necessary, TI said.
TI and the Singapore Economic Development Board will each hold 26% of the new company, with TI retaining the right to purchase Singapore's shares. H-P and Canon will each hold 24%.
England said the participation of H-P and Canon was especially important because it created a closer relationship with major customers, a view that was echoed by Joe Beyers, business development manager with H-P.