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Texas Instruments to Sell Its TI-Acer DRAM Stake to Acer

TI agreed to sell its 33% stake in the TI-Acer DRAM venture to Acer, shifting control of a Hsinchu fab while retaining a transitional supply relationship.
From TheFinanceBase Team3 min to read
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On March 4, 1998, Texas Instruments (TI) agreed to sell its 33% stake in the TI-Acer dynamic random-access memory (DRAM) joint venture to Acer Group, which would take control of the venture’s Hsinchu, Taiwan, wafer fab. The announcement followed a $141 million loss at TI-Acer in 1997, as prices for its 16-megabit and 64-megabit memory chips fell. Acer planned to keep making DRAM and develop the operation into a semiconductor foundry.

What TI agreed to sell

The agreement covered TI’s 33% ownership stake in TI-Acer and control of the joint venture’s Hsinchu fab. Acer already held 48%; other shareholders collectively held the remaining 19%. Their approval was required for the transaction to proceed. The announcement did not disclose a purchase price, and the companies expected the deal to close in the second quarter of 1998. That was a forecast at announcement, not confirmation that the sale closed on schedule. EE Times reported the terms on March 4, 1998.

This was a sale of TI’s interest in one joint venture—not evidence that TI had immediately abandoned every DRAM-related activity worldwide. The report described the move as a major step toward TI’s withdrawal from the commodity-memory business.

Why TI wanted out

TI-Acer lost $141 million in 1997. The report attributed the loss to falling prices for 16-megabit and 64-megabit DRAMs. That pressure made continued exposure to commodity memory less attractive for TI and prompted questions about the company’s place in the DRAM business.

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The parties had also dropped plans for an initial public offering of the joint venture shortly before announcing the sale. The sequence points to a period of restructuring pressure, but the announcement did not explain why the IPO was withdrawn or establish that the loss caused its cancellation.

What Acer was taking control of

TI-Acer had operated for about nine years, since approximately 1989. Its main manufacturing asset was a Hsinchu facility with both 8-inch and 6-inch wafer lines. It made 16-megabit and 64-megabit DRAMs using 0.28-micron technology. These are period-specific specifications; they should not be read as descriptions of modern leading-edge manufacturing.

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For Acer, the transaction offered control of an operating semiconductor manufacturing base, not simply a stake in a memory supplier. The announcement identified the fab and its production capabilities, but did not provide output, utilization, employment or revenue figures.

Acer’s plan: DRAM plus foundry manufacturing

Acer said it planned to rename the operation Acer Semiconductor Manufacturing Inc. (ASMI) and pursue foundry work alongside DRAM production. DRAM manufacturing means producing memory chips for the company or venture’s own product business. Foundry manufacturing means making chips designed by other companies.

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Acer chairman and CEO Stan Shih presented the transaction as support for Acer’s ambition to become a major semiconductor manufacturer. The foundry plan offered a possible route beyond commodity memory, but the announcement named no foundry customers or contracts. It therefore established an intention, not proof that foundry production would quickly offset the weak DRAM economics.

How TI would remain connected to the fab

Ownership and supply were set to separate rather than end at once. During a transition period, TI planned to continue buying 16-megabit and 64-megabit DRAMs from the Hsinchu plant, continuing a purchasing relationship that dated to the joint venture’s formation.

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TI and Acer also agreed to a 10-year semiconductor patent cross-license. It would allow ASMI to manufacture its own products and operate as a foundry for products designed by other companies. The reported arrangement was a cross-license, not a transfer of all TI semiconductor technology.

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How the deal fit TI’s broader DRAM reassessment

Around the same period, TI agreed to end a separate Texas DRAM joint venture, TwinStar Semiconductor, by acquiring Hitachi’s stake. That was a different venture and a different transaction structure. It provides context for TI’s broader reconsideration of DRAM manufacturing, but should not be confused with the sale of the TI-Acer stake.

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What remained unresolved at announcement

  • Price: The financial terms were not disclosed.
  • Approval: Holders of the remaining 19% of TI-Acer shares still had to approve the sale.
  • Closing: The second-quarter 1998 date was expected, not confirmed.
  • Future operations: The announcement did not specify future DRAM output or establish whether foundry work would compensate for falling memory prices.
  • IPO: The companies had abandoned the offering, but the report gave no valuation, investor feedback or detailed reason.

In practical terms, TI was reducing its ownership exposure to a money-losing commodity-memory venture while retaining a temporary supply relationship. Acer was taking on the same DRAM-market risk in exchange for control of a substantial fab and a platform it hoped to use for contract manufacturing.

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