Experts Hoping For Chip-Market Rebound As Prices Have Stabilized
NEW YORK -(Dow Jones)- The downturn in the semiconductor market,
which has suffered from overproduction, may be bottoming out, analysts
said at an industry gathering in San Francisco Friday.
Memory-chip contract prices have risen to between $8 and $10 in
recent weeks, according to Micron Technology Inc. officials. A few weeks
ago, those prices were in the low- to mid- $7 range. Spot prices - which
fluctuate on a daily basis, as opposed to contract prices, which are
negotiated for a specific time period - have been strong for a couple of
months.
"It's been the most stable since pricing started heading down at the
end of 1995," said Josephthal & Co. analyst Larry Borgman.
Memory chip prices had plunged as much as 80% over the past year
because of a glut in supplies and the Asian economic turmoil. Prices for
certain types of dynamic random access memory, or DRAM, chips have
fallen to as low as $1.30. Some of the world's largest manufacturers in
South Korea and Japan have scaled back or halted production in an effort
to stabilize prices.
But analysts said demand for DRAMs is benefitting from seasonality as
well as the fact that greater quantities of memory are being used in
personal computers. Micron (MU) has run out of 64-megabyte DRAMs because
of strong demand, said BancBoston Robertson Stephens Inc. analyst Dan
Niles. He also said he believes that earnings estimates should rise.
Micron is expected to post a loss of $1.23 a share in fiscal 1998,
compared with earnings of $1.53 in fiscal 1997. The company is forecast
to post a loss of 49 cents in 1999.
For an industrywide recovery to take place, analysts say the
communications industry must continue its rollout of new
telecommunications equipment, such as digital wireless handsets, which
have been selling briskly, and semiconductor-based networking system
software. |
