THOMSON TO DELAY US$700M SINGAPORE PLANT BY ONE YEAR
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Cautious On Outlook In '98
SINGAPORE (AP-Dow Jones)--Franco-Italian chip maker SGS-Thomson said Wednesday it will delay the construction of its U.S.$700 million semiconductor plant in Singapore by about a year.
Company president for Asia Pacific, Jean-Claude Marquet said Wednesday that the scheduled plant will come on stream in late 1999, instead of the initial target date of early 1999. The company is also cautious about the outlook of the semiconductor industry in the Asian region over the next three to six months, he added.
He said excess semiconductor manufacturing capacity continues to exist in the industry. Most of it is in Korea, he said.
Speaking at a press briefing Wednesday, Marquet said there has also severe downward price pressures in its business. The price of some of the low-end chips it makes have slumped 25% in Asia this year, he said.
'We hope prices will stabilize soon,' he told the press, adding that there were no signs of that happening yet.
'Need To Wait For Three To Six Mos'
'We aren't going as fast in the new fab (wafer fabrication plant) as we had intended to go in the beginning,' said Marquet. 'We are cautious about the outlook of the Asian semiconductor market,' he added.
Over-capacity as a result of rapid global expansion in the past few years, especially by South Korean companies, is currently hurting the semiconductor market. Manufacturing capacity has been in excess mainly in the area of making memory chips, commonly called Dynamic Random Access Memory, or DRAM.
Korean companies, which have had excess capacity especially in DRAMs, have in the past few months converted some of their production to making specialized computer chips, which is SGS-Thomson's core business, said Marquet.
Also, customers of some semiconductor companies are in trouble and 'we need to wait for three to six months' before SGS-Thomson can see clearer signs of where the semiconductor industry is headed, said Marquet.
Turning to the turmoil in financial markets in the region, Marquet said the company wasn't affected as yet. Part of the reason is because 75% of its chip output is distributed to customers in the U.S., Europe and Japan.
In Asia, its products are all priced in U.S. dollars, therefore eliminating any room for foreign exchange losses. But the company declined to say if demand for its products will slow down as a result of the weaker Asian currencies. |
