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U.S. firms feud over Asian chip deal

Bell Industries alleged that National Semiconductor ended a 20-year distribution deal because it doesn't want to share its distributor with Asian companies.

A public feud broke out today when National Semiconductor decided to end a 20-year relationship with its computer products distributor and Bell Industries decided to retaliate by leveling accusations of "hypocritical" business practices involving Asian companies.

Bell is accusing National of ending the distribution deal between the two companies because Bell signed an agreement to distribute chips for Korean manufacturer Samsung, alleging that National doesn't want to share its distributor with Asian firms.

"National has a stated policy that they will not share shelf space with Asian semiconductor manufacturers. One can draw his own conclusion regarding National's decision," Bell president and COO Bruce Jaffe said in a prepared statement. "National's policy is archaic, inappropriate for a 21st century company, and hypocritical in light of their ongoing relationships with those Asian businesses. It is also not the way business should be conducted in the United States."

Bell's charges come at a time of turmoil for the global semiconductor market and heightened international tensions. Demand for chips is down, and most major manufacturers are posting losses, with the noted exception of Intel.

National spokeswoman Kate Peters denied that her company maintains any formal policy about sharing distributors with Asian companies and said this is the first time such an accusation has been made. According to National's side of the story, the decision to drop Bell was part of an "ongoing review process" in which it came up short.

"Bell at some point somewhere along the line did not meet all the criteria," Peters said, without disclosing any details. "For National this is a business transaction. The release Bell came out with today delved more into the emotional side of it."

National has since signed a deal with Wyle to replace Bell as its distributor. Bell says it sold about $48 million in National products in 1995.

Jaffe stands by his story and says that National's distribution management team verbally communicated to them that sharing shelf space with Asian competitors was against their policy.

National and other U.S. chip makers are lobbying intensely for the renewal of the 10-year-old U.S.-Japan semiconductor trade agreement, which expires July 31. The Japanese chip industry says the agreement violates international free-trade pacts and is no longer necessary to open Japanese markets to foreign competition.

Related stories:
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Japan, U.S. trade barbs on chip accord