Micron deal may delay chip recovery-Japan analysts
TOKYO, June 19 (Reuters) - Micron Technology Inc's $800 million deal to buy the memory chip business of Texas Instruments Inc may delay a hoped-for recovery in the memory chip market in 1999, Japanese analysts said on Friday.
They say Micron, with its expanded capacity, is certain to boost production of 64-megabit dynamic random access memory chips (DRAMs), accelerating the already steep decline in chip prices.
''Even though South Korean makers will cut their production in the future amid financial woes, Micron will step in and fill the void,'' said Yoshiharu Izumi of SBC Warburg Japan.
"The hoped-for recovery in 1999 is jeopardised," he said.
Analysts say the decline in the price of the current mainstay 64-megabit DRAM is gathering speed as South Korean makers boost production despite sluggish demand for personal computers, the major use for DRAMs.
Takashi Mimura, analyst at Societe General, said he had revised down his forecast for the year-end price of DRAMs for volume users to $6 from his earlier estimate of $8.
The chips currently sell for about $10 to $11.
The price could dip below $3 next year in a worst-case scenario, Mimura said.
''Market principles are not working at all. Unless production is cut back, the whole industry, including Micron, will fall down,'' he said.
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