Some New Signs of Recovery On Beleaguered DRAM Front?
An INTERACTIVE JOURNAL News Roundup
September 4, 1998
As all heads turned toward Wall Street this week, and Microsoft continued to battle with the Justice Department, the troubled memory-chip industry showed signs of straightening itself out.
Chip makers world-wide have been hurt by the economic downturn in the Asia-Pacific region and reduced demand from computer makers. In particular, the market has been hurt by a glut of dynamic-random access memory, or DRAM, chips.
Japan's Fujitsu Says It Will Close Plant in England, Cutting 600 Jobs (Sept. 4)
Hitachi to Post a Huge Loss, its First Since World War II (Sept. 4)
Japan's Mitsubishi, Hitachi Cut Jobs at U.S. Chip Units (Sept. 1)
Texas Instruments Sells Off Chip Unit to Micron Technology for $800 Million (June 19)
First, Mitsubishi Electric and Hitachi, two of Japan's "Big Five" semiconductor makers, Tuesday announced plans to scale back chip-production efforts in the U.S., laying off about 1,000 U.S. employees in the process. Then Friday, Fujitsu said it is closing its semiconductor plant in northeast England, putting about 570 jobs in jeopardy as it searches for a buyer. It was the second recent chip-plant closing in England. In late July, Germany's Siemens said it would close its 1,100-employee chip plant there.
Hitachi, Mitsubishi and Fujitsu as well as Toshiba and NEC had all slashed their forecasts for the current fiscal year because of plunging chip prices and difficulties in the consumer-electronics area. In fact, Hitachi blamed a surprise fiscal first-half pretax loss, which it announced during the week, on worse-than-expected conditions in the global chip market, especially DRAMs. It will be Hitachi's first loss since World War II.
Meanwhile, on the other side of the globe, two of South Korea's troubled conglomerates, or chaebol, tried to straighten out their chip businesses. Chip makers Hyundai Electronics Industry and LG Semicon announced plans to merge -- although many major details, such as management and shareholder control, have yet to be worked out. Combined, Hyundai and LG supply about 18% of the world's computer-memory chips.
Also, Korea's Samsung Electronics said it would halt chip production for two weeks of both 16-bit and 64-megabit DRAMs., marking the fourth time since June that Samsung has halted manufacturing.
Jonathan Joseph, an analyst at NationsBanc Montgomery Securities, said that the periodic production halts have helped to boost DRAM prices since they appeared to hit bottom in June. He said prices for both 16-megabit and 64-megabit DRAMs are up by about 30% since June.
The consolidation and restructurings come as U.S. producers also try to realign amid the prolonged slump. Micron Technology recently agreed to buy Texas Instruments' remaining DRAM business -- after TI pulled out of its TI-Acer joint DRAM venture with Taiwanese conglomerate Acer. And International Business Machines apparently is trying to get out of the DRAM business, too, according to comments by Chief Executive Officer Louis V. Gerstner in May.
|
