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Oki a victim of memory price drop

More evidence that the plunge in memory prices is taking its toll on major chip producers.

Oki Electric, one of Japan's top manufacturers of microchips and communications products, said that it will move away from memory chip production, more evidence that the plunge in memory prices is taking its toll on major chip producers.

The company will shift from memory to "system" chips by the year 2000, according to a report in the Nihon Keizai Shimbun, Japan's largest business daily.

The news follows an announcement earlier this week that Texas Instruments (TI) is selling off its stake in a Taiwanese memory chip facility to Acer as part of an effort to reduce the company's exposure to the volatile memory chip market. The TI divestiture in turn succeeded the February collapse of a major joint memory chip venture between Hitachi and TI, which also fell apart under the weight of tumbling memory chip prices.

Oki Electric plans to reduce the memory portion of its business from 50 percent to 33 percent, according to the report.

A glut in chip supply and the devaluation of Asian currencies, among other factors, have forced prices of 16-megabit and 64-megabit memory chips to levels near and even below manufacturing costs. These chips are found in the memory modules used in PCs, portables, workstations, and server computers.

As a result, a number of the world's largest memory chipmakers are either scaling back investment in new plants or are divesting themselves of excess capacity.