American Telephone & Telegraph Co. said yesterday that it would begin commercial production this summer of the next generation of computer memory chips, opening a new front in the competition between the United States and Japan for dominance in the world's semiconductor marketplace.
AT&T's Western Electric Co. subsidiary said its 256K Random Access Memory chips will be shipped to users later this year. The chips, which can store 256,000 bits of computer information, represent a quantum leap in memory capacity over the current industry standard, 64K RAM.
Reportedly, Western Electric will be the first company to produce the 256K RAM chip in quantity, marking AT&T's first venture into the commercial semiconductor market.
A commercially competitive 256K RAM chip will mean that business and personal computers can be made even smaller, faster, cheaper and more reliable.
The AT&T move is seen as having symbolic importance in the wake of Japanese industry's near-total dominance of the 64K RAM chip market and its pronouncements that it will duplicate that success in the 256K RAM market. However, says Don Liedberg, manager of sales components and electronic systems for Western Electric, "I have no reason to believe that American companies are ahead of the Japanese in this area."
Fujitsu, Oki and Hitachi are among the Japanese companies that have developed prototype 256K RAMs.
"Memory chips have been the bellwether of the semiconductor industry," said Paul B. Schenk, manager of NASA's high speed computing facility at the Goddard Space Flight Center. "They are the single high volume item that semiconductor manufacturers create. As advances are made in memory fabrication, they can be applied to other semiconductor products such as microprocessors."
Worldwide sales for semiconductor products in 1982 exceeded $14.6 billion. Dataquest, a California-based market research company, predicts the world market for the 256K chip will hit $3.7 billion by the end of the decade.
U.S. companies were originally the world leaders in semiconductor technology but, according to industry analysts, lost their edge through a combination of Japanese initiative and their own low capital spending during the 1974-75 recession. In 1980, the Japanese were first to market with the 64K chip. A vicious price war ensued and, as of last year, the Japanese semiconductor industry was the one with 70 percent of the world market.
A similar price war is expected for the 256K RAM. "The 64K RAM now sells for below $5," says Stewart Sando, a spokesman for Intel Co., the California company that is the world's eighth largest semiconductor manufacturer. "The 256K RAMs will initially be four to five times that; the first users will pay a premium for that memory density. But they, too, will sell for under $5 in four or five years." Sando says Intel will begin marketing its 256K chip next year.
However, this time, according to Ken McKenzie, Dataquest's manager of semiconductor research, American companies seem to be better prepared for a battle with the Japanese companies. "I see a very exciting contest between the Japanese and Americans," he said. "Texas Instruments and Motorola two of the leading U.S. semiconductor companies are talking very aggressively. They learned their lesson with the 64K chip and they're not going to let that happen again."
The strength of the U.S. semiconductor industry is considered vital to both the country's computer industry and to defense. IBM purchased 12 percent of Intel for $250 million late last year in a move widely considered to be a way to assure a line of semiconductor supply. Ulric Weil, a computer analyst for Morgan Stanley, contends that IBM will put its own brand of 256K chips into a forthcoming series of top-of-the-line computers. Ultimately, he says, the chip will find its way into a future generation of IBM's personal computer.
The Defense Department's Advanced Research Projects Agency recently expressed concern that the U.S. might have to depend on Japanese companies to fill its requirements for electronics systems and computers by the end of this decade.
The serious marketing of the 256K RAM market is expected to begin next year as customers configure their systems to accept the improved technology. "Both sides are gearing up," says Dataquest's McKenzie, "It will be a lot of fun--at least, more fun than the last one was. The 256K will be a far more evenly fought battle between the U.S. and Japan."