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Technology Stocks : Alliance Semiconductor

ALSC 0.810

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Jul 10 5:00 PM EST

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To: SBHX who wrote (7037)	3/4/2000 2:43:00 PM
From: DJBEINO	Read Replies (1) of 9582

UMC Company Visit: UMC's operating results and technological progress are stronger than we had forecast. We remain BULLISH on Taiwan foundries and recommend investors to ACCUMULATE UMC (2303) and TSMC (2330) for long term investment. UMC's Jan. 2000 operating results: 50% gross margin and 38% op. margin, better than our forecast 46% gross margin and 34% operating margin. Its target is 55% gross margin in 2000. UMC capex plan: 1999: US$1.31bn, 2000e: US$2.4bn, 2001e: US$3.3bn (Hitachi joint venture included). TSMC has declared its US$4.7bn capex plan in 2000, which is 96% higher than UMC. The difference is due to a newly added 12-inch wafer production line and equipment purchase demand of TSMC-Acer and WSMC which were acquired by TSMC in 4Q99. In 2000 TSMC will have 42% capacity advantage over UMC. UMC's telecom and networking products now account for 50% of its output, up from 35% in 1999. Top 5 customers: Xilinx, Sandisk, Motorola, Nokia and Ericsson. These account for 32% of its production. UMC's 0.25 micron and below products now account for 35% of output and expect to reach 70% by 2001.

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