TOKYO IBM and Toshiba Corp. said today they will build a $1.2billion computer chip manufacturing plant in the United States - atightening of ties between American and Japanese semiconductormakers.
The 50-50 venture, to be built at an IBM-owned site in Manassas,Va., will produce next-generation 64-megabit memory chips. Each chipwill be able to store the equivalent of the complete works ofShakespeare.
By joining together, the two companies said they hope to reducethe risk and shorten the time it takes to launch production of thehigh-tech chips.
Each new generation of memory chips, which pack millions oftransistors onto tiny pieces of silicon, requires more costly andcomplicated technology. As a result, Japanese and U.S. semiconductormakers have banded together in a web of development and productionagreements.
The IBM Corp.-Toshiba deal will be the latest of severalpartnerships between the two companies.
The venture will combine IBM's technological prowess andToshiba's mass-production skills, "coupled with the trust that hasresulted from our deep relationship," IBM Japan Vice President KiyojiIshida said in Tokyo.
Virginia Gov. George Allen helped lure the companies byproposing $48.2 million in tax and other incentives, the second timehe has snagged a new high-tech plant this year. In April, Allenproposed $85.6 million in incentives to get Motorola Corp. to chooseVirginia for a $3 billion plant west of Richmond. The Virginialegislature must approve both proposals.
Today's deal "confirms Virginia's emergence as the newtechnology center of the eastern United States," Allen said. Itcomes several months after Walt Disney Co. abandoned plans to build atheme park in the area, after bitter opposition from advocates forpreservation of Civil War historic sites.
The Manassas plant will help meet the fast-growing worldwidedemand for memory chips, the mainstay of high-tech gear likecomputers and cellular phones, whose sales are soaring. Increasinglythe chips are also used to control electronics in everyday productslike cars and washing machines.
Chip sales are expected to cross the $100 billion mark thisyear, from just over $90 billion in 1994.
Construction will begin in January on the Virginia plant, andproduction is expected to begin in fall 1997. The plant willinitially employ 700 people, to be boosted to about 1,200 as theplant reaches its full capacity of more than 27,000 silicon wafers amonth.
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