I think it was more that a Japanese electronics manufacturing firm had obtained owership of the SH4 architecture from hitachi (DC used SH4), and as a demonstration of their capabilities, and to develop components useful in small portable electronics, they had created a "dreamcast on a chip" - a small chip which incorporated much of the DC hardware and architecture (but likely not the custom SEGA firmware such as the bios, or the gdrom drive, maybe not the PowerVR graphics chip either, I'm not sure). This proof of concept was to show off their miniaturization capabilities and maybe promote use of the SH4 in stuff like cell phones, rather than to actually roll out and produce a portable dreamcast.
These electronics manufacturing firms either create or supply components to be used in consumer electronics (IE: Yamaha creating a GDrom drive which gets dropped into a hitachi motherboard with a PowerVR graphics card), rather than actually designing and marketing consumer electronics which contain the multiple parts, which is what someone like Sega or Nintendo would do.
There appear to be many discussions and reports similar to the article which is no longer available. Here are a bunch:
http://www.google.com/search?q=%22dream ... =firefox-a