OWW, Ah, the Rose-Tinged glasses... I've been meaning to ditch those -- kind of a hangover from the 60-ies... but let me extract from that "Negative" report on the SEA semis:
... ((Korea poured a lot of bucks into))
expensive chip-making equipment. Eventually it became a world-class exporter of semiconductor memory
chips -- but at a terrible price.
South Korean firms such as Samsung Corp. and Hyundai produced so many chips that memory prices
collapsed. While the sharp decline in memory prices last year enabled consumers to buy cheaper
computers, it meant the South Korean firms were selling chips for less than it cost to produce them.
Now they must cut back their investments just as they are falling behind U.S. manufacturers, according to
G. Dan Hutcheson, president of VLSI Research, a market research firm in semiconductor manufacturing
equipment.
''A year ago the South Koreans were world-class producers, but they are not anymore,'' he said. ''The
question now is how much money are they losing, and we figure it will be about $2.7 billion.''
Despite the growing losses, he and other analysts said, the South Koreans must keep pumping out chips,
even at a loss, to earn desperately needed foreign currency.
But Hutcheson said equipment makers shouldn't be overly concerned about canceled orders in South
Korea or Japan. Continuing worldwide demand for semiconductors will fuel demand in Taiwan, Europe
and other parts of the globe. Besides, sales of semiconductor manufacturing equipment are growing in the
United States.
''Equipment makers are shifting away from a Korea that has gone stone cold to other places like Taiwan
who want to take market share away from the Koreans,'' Hutcheson said.
The South Koreans, Hutcheson said, really should be investing in more equipment to make them
competitive again. But the stringent terms of the IMF bailout, which are sure to slow South Korea's
domestic economy, may make it difficult for even South Korea's strongest high-tech companies to find the
capital they need to invest.
We would like to call attention especially to the points that the semi equipment makers shouldn't sweat the loss of Korean and Japanese markets, as those sales will be made up elsewhere, particularly in Taiwan and the U.S.
And second that the Koreans, et al must continue investing to make themselves competitive again, but that it will be "difficult for even South Korea's strongest high-tech companies to find the capital.."
((In the spirit of Christmas, I think TWW might want to consider taking up a collection for the Chaebols of Korea..<g> With considerable success, they might be able to go on selling chips at a loss for a few more years :-)... TSO, down, down.. No holiday spirit
whatsoever..naughty, naughty!! <g>.. Getting ready to buy AMAT, NVLS, more instruments, (VECO, GSNX, etc).. and will reconsider whether the enormous future profits on those should be shared with unfortuante Korean conglomerates... down, down, naughty naughty...TSO
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