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To: mark garner who wrote (5009)	6/15/1999 4:38:00 AM
From: DJBEINO	Respond to of 9582

STOCKWATCH: UMC -- 4 (may spark merger interest in DRAM sector: analyst) Warburg Dillon Read analyst Tony Tseng said the respective mergers announced by TSMC and UMC will help Taiwan's comptitiveness in the semiconductor industry globally and may trigger similar moves in the DRAM sector. TSMC, which has decided on acquiring stakes in Acer Inc unit Acer Semiconductor Manufacturing Inc, is reportedly in talks for a stake in another semiconductor maker, Powerchip. "Competition between TSMC and UMC (in the foundry sector) is considered a good one, which will widen the gap between the Taiwan-based foundry companies and competitors like Standard Charter in terms of capacity, profitability, and revenue." TSMC and UMC may set an example for consolidation in the DRAM sector, as local DRAM producers together only account for about 10 pct of the global market, he said. "Consolidation is the trend, not only in manufacturing but also in financial entities." A successful merger can provide synergy to enhance competitiveness. Credit Suisse First Boston's Lu said the planned reorganisation of five UMC group unit members can integrate group resources to improve efficency. "UMC's capacity will be raised while administration and research and development cost can be reduced." He said the merger move will have a long-term impact on UMC's fundamentals. Accordingly, improvement in financial transparency may help to attract foreign investors' interest, he said. Foreign investors hold a combined 17.47 pct stake in TSMC but only 3.55 pct in UMC as of yesterday amid previous uncertainties over the financial arrangements among UMC group members.