Decline in the face of Asian competition
Mostek was bought by United Technologies (UTC) in 1979 for US$345M to prevent an unfriendly takeover from Gould at the 10th anniversary of the company's founding, when a large block of stock options controlled by Sprague Electric became vested. The leadership UTC chose for its semiconductor division did not appreciate the up-front investment required or the long time for ROI.[11]
UTC at first invested hundreds of millions to expand Mostek, then hundreds of millions more trying to keep the company going during the various semiconductor and videogame crashes of the early 1980s. UTC sacrificed Mostek's leadership position in some markets, focusing instead on the highly competitive (and eventually unprofitable) DRAM business.
Unfortunately the DRAM marketplace was the beachhead where Japanese firms would make their successful assault on the global semiconductor market. In 1985, when 64K DRAM memory chips were the most common memory chips used in computers, and when more than 60 percent of those chips were produced by Japanese companies, semiconductor makers in the United States (including Mostek spin-off Micron) accused Japanese companies of export dumping for the purpose of driving makers in the United States out of the commodity memory chip business. Prices for the 64K product plummeted to as low as 35 cents apiece from $3.50 within 18 months, with disastrous financial consequences for U.S. chip makers. On 4 December 1985 the US Commerce Department’s International Trade Administration ruled in favor of the complaint,[12] but the ruling was too late to save Mostek.
Mostek's 256K DRAM had been delayed by a then-ambitious double-layer metallization design. In 1985, when the price for 64Ks had collapsed and 256K prices were already under $10, Mostek's 256K device was still not ready for volume production, and the company suffered heavy losses. Eventually, on 17 October 1985, UTC gave up, closed Mostek completely, and days later sold it to Thomson-CSF, a French Government electronics company, for a mere $71 million. UTC did retain a Mostek fab in Colorado Springs as the UTMicroElectronics Center. [13]
By 1986, all United States chip makers, with the exception of Texas Instruments, Micron Technology, Motorola and IBM had stopped making DRAM.[14] As of 1990, they represented less than 10% of the world's supply. [15]