Toshiba enforcing patents in DRAM market squeeze

Electronic News, April 6, 1992 by Brooke Crothers

TOKYO -- Caught in a 4M DRAM market share fight with price-aggressive Korean memory manufacturers, Toshiba is demanding that Samsung -- and possibly other Korean firms -- take licenses on its patented DRAM technologies.

Toshiba, which has conceded losing DRAM market share along with other Japanese producers against Korean rivals, last week acknowledged patent licensing negotiations with Samsung, but claims the talks are not related to market conditions. Nor would a Toshiba spokeswoman specify what patents are under discussion or if Toshiba is demanding royalty payments.

The Toshiba action is reminiscent of similar DRAM patent demands made by Texas Instruments against Japanese and Korean memory suppliers, and more recently by Micron Technology against many of the same companies.

Hideharu Egawa, Toshiba vice president and semiconductor group executive, said earlier that Samsung and Goldstar were slicing 4M DRAM prices heavily to try to gain global market share -- especially in the U.S. He claimed they were selling below cost, but said Japanese makers are precluded by the U.S.-Japan semiconductor antidumping agreement from matching the Korean firms' prices. Price-cutting "helped them gain some market share," Mr. Egawa said of Samsung and Goldstar.

Meanwhile, semiconductor analysts expect Samsung this month will surpass Hitachi as the world's largest 4M producer, with more than 4 million devices a month. Samsung is already rated the largest 1M producer in the world.

Akira Minamikawa, semiconductor analyst at Dataquest Japan, attributed the Toshiba patent move as directly aimed at "forcing the South Korean companies to put a halt to the price slashing. This is hitting Japanese makers especially hard since they are already suffering from (over-capacity) problems, which have the potential of getting even worse at the 16Mb level if the pricing situation is not dealth with right away.

"Now is the time for Japanese companies to make the move," he added.

Steve Myers, electronics analyst at Jardine Fleming Securities, said "Korean makers have been suspected of infringing on Japanese patents thorugh reverse engineering for some time." He expected an ironic twist if Toshiba and other Japanese DRAM firms seek legal recourse against the Koreans: "Since Korean (DRAMs) are not widely used in Japan, I think we are going to see the spectacle of Japanese makers going to court in the U.S."

The Toshiba action comes at the same time Micron Technologies is seeking a 14 percent U.S. semiconductor tariff (there is no duty now) on imported devices.

The Korean 4M DRAM market gains come at a time when Japanese producers are hit by sluggish sales of the device after making massive investments to gear up for expected large 4M DRAM sales that have been slow in coming.

Toshiba, nonetheless, downplayed the DRAM price-cutting as the main impetus for launching the licensing demands. "Toshiba feels the time has come to end a lingering impasse and we intend to clarify matters relating to patents. To date we have not given enough weight to patents, but this will change," the Toshiba spokeswoman said.