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To: Graham C. who wrote (47780)	8/24/1999 8:48:00 AM
From: DJBEINO	Respond to of 53903

Fujitsu Turns Profit on Chips in July; Demand for High-End Products Grows By Chiharu Kamimura and Gary Schaefer Tokyo, Aug. 24 (Bloomberg) -- Fujitsu Ltd., Japan's largest computer company, said its microchip business made money last month for the first time in more than two years because of rising demand for sophisticated chips used in portable phones and other digital applications. Tokyo-based Fujitsu's chipmaking division recorded a monthly profit in July for the first time since April 1997, said company spokeswoman Chiaki Kuwahara. Rivals Hitachi Ltd. and Mitsubishi Electric Corp. also said earnings are improving as they step up production of chips used in the newest generation of portable electronics and distance themselves from a glutted market for computer memory chips. That strategy is encouraging some analysts to take a more bullish view of Fujitsu and has boosted its stock to records in recent weeks. Japan's fourth-biggest chipmaker posted a 13.64 billion yen ($121 million) loss in the year ended March 31 in part because of slumping prices for the dynamic-random access memory chips used in most PCs. ''There appear to be signs of recovery in semiconductors, which were a bottleneck on earnings,'' said Fumiaki Sato, an analyst at Deutsche Securities Ltd. Fujitsu's stock today jumped 5 percent to 3,360 yen, its biggest percentage gain in almost a month. Shares have more than doubled this year, closing at an all-time high of 3,680 yen on Aug. 3. Separately, Hitachi said its chip business made a monthly profit in June. Japan's third-largest chipmaker benefited from cost-cutting efforts and strong worldwide demand for logic chips, said spokesman Tsuyoshi Miyata. Mitsubishi Electric Corp. expects its semiconductor business to return to the black in the second half of the year, said spokesman Motokazu Isozaki. Sony Corp. last week said the revenue of its semiconductor division rose about 20 percent in the April-June quarter from the same period last year. The world's second-largest consumer electronics company forecasts the division's sales will rise 20 percent to a record 270 billion yen for the year through March. Hitachi's stock rose as much as 3 percent to 1,135. Mitsubishi Electric gained 1 percent to 580 yen. Sony climbed 2 percent to 14,800 yen. Reconfiguring Fujitsu is de-emphasizing DRAM production in favor of more profitable ''flash memory'' chips -- used in portable products such as mobile phones -- and the large-scale integrated circuits that are the brains of household digital appliances. As one part of that strategy, Fujitsu said Friday it will spend 90 billion yen on its chip business this fiscal year, 25 billion yen more than it originally projected. The new investment be directed toward reconfiguring production lines in northern Japan and Oregon to make flash memories and logic chips for products such as camcorders. The company closed its DRAM factory in England last year as part of an effort to reduce production of the chips.