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To: djane who wrote (5943)	7/22/1999 7:26:00 PM
From: djane	Read Replies (2) \| Respond to of 29987

Motorola Sees Asia Driving Growth Thursday July 22 6:57 PM ET By Donny Kwok HONG KONG (Reuters) - Motorola Inc. (NYSE:MOT - news) sees strong growth potential for its semiconductor products in the Asia-Pacific region due to rapid developments in Internet and wireless communications. ''We see very good development potential in the Asia region,'' Joe Yiu, vice president and general manager of the Asia-Pacific region for semiconductor products told Reuters in an interview. Motorola's Asia-Pacific strategy focuses on four areas: wireless communication; networking and computer; transportation; and imaging and digital entertainment. ''This is in line with an accelerating demand for products in the region for wireless communication, Internet and digital entertainment systems as well as a growing number of car owners in the transportation area,'' Yiu said. ''We have positioned ourselves in the high growth market segment,'' he added. ''Mobile phones, networks and Internet have shown the fastest growth in the Asia market.'' Last week, Motorola reported a larger-than-expected second- quarter operating profit of US$273 million, bolstered by strong growth in semiconductors and in digital wireless telephones and a recovery in Asian markets. Motorola earned 44 U.S. cents a share before one-time items, compared with US$6 million profit, or 1 cent a share in the year-ago quarter. Its sales rose seven percent to US$7.5 billion in the second quarter of 1999. Sales of its personal communications segment rose 17 percent to US$2.8 billion, and sales in the semiconductor products sector increased 9 percent to US$2.0 billion. Motorola expects to post strong earnings in second half 1999 with prospects for brisk digital phone sales and improvement in the semiconductor industry. Yiu said orders had increased in all regions, led by Asia-Pacific and Japan. ''The Asia region will surpass other areas,'' Yiu said. Within Asia, Taiwan is the biggest personal computer manufacturing base; China the biggest cellular phone market; South East Asia the biggest consumer region. And with Internet growth accelerating, U.S. firms were producing or outsourcing their production in Malaysia. ''Most of the production and consumption activities happen in South East Asia,'' Yiu said. ''The rate of consumption growth in the region is definitely higher and is seen leading Japan, Europe and the U.S. The growth will be significant.'' He declined to give projections. Yiu saw significant benefit from rapid Internet growth, which would create demand for the group's products. Asia-Pacific was a big manufacturing base, and Motorola would contract out more of its manufacturing to cut costs and increase capital efficiency. Motorola was committed to outsourcing 50 percent of overall production in value terms by 2002, Yiu said. The target would be met by joint ventures, improving productivity and adding value to products. ''We are confident that we can achieve our target to reach 24 percent by the end of this year and to 50 percent by 2002,'' Yiu said. About 14 to 18 percent of the group's production was now contracted out to third party manufacturers and joint ventures. The outsourcing would help to improve return on net assets and capital efficiency. ''We can allocate more capital to intellectual property development, (and) to build up our own marketing and sales channels,'' he said. Questions or Comments Copyright © 1996-1999 Reuters Limited.