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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: Black-Scholes who wrote (45475)	9/27/1999 5:39:00 PM
From: DiViT	Read Replies (1) \| Respond to of 50808

"We had been putting together a strong fourth quarter," the C-Cube spokeswoman said. electronicnews.com Aftershocks of Taiwan Quake Effects on global semi market to linger By Carol Haber The Taiwan earthquake will have a significant impact on the worldwide semiconductor industry in the fourth quarter and beyond due to disrupted supply of foundry services and increased prices for memories and other products, analysts and industry insiders said last week. Current expectations are that the disruption of supplies will last at least two weeks after the quake, despite the speed at which major Taiwan foundries such as Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) are moving to bring operations back on track. Companies largely dependent on Taiwan foundries, mostly fabless firms in the communications and graphics arenas, will be the hardest hit. C-Cube Microsystems Inc., Broadcom Corp., Galileo Technology Ltd., ESS Technology Inc., 3dfx Interactive Inc. and PMC-Sierra Inc. are said to be highly vulnerable. "This will affect everyone's planning, prices and lead times," said Joseph Osha, an analyst with Merrill Lynch. "It will affect you even if you're not manufacturing in Taiwan. The pricing implications will ripple through the market." Even those companies that are lucky enough to find an alternate source in a time of substantial capacity utilization will face extended periods of qualification. "It's not like making Barbie dolls," Osha said. "It takes a lot of time to qualify a new process." C-Cube, Milpitas, Calif., for example, has 70 to 80 percent of its capacity coming from Taiwan. The maker of chips for products including DVD and set-top boxes is seeking alternate sources, a spokeswoman said. C-Cube is working with WaferTech in Camas, Wash., a joint venture headed by TSMC that also accommodates Altera, Analog Devices Inc. and others. C-Cube's third-quarter results to be released on Oct. 19 should show minimal or no impact from the quake. However, the fourth quarter is a different story. "We had been putting together a strong fourth quarter," the spokeswoman said. "This will have an effect, but we can't quantify it yet." Meanwhile, large companies like Motorola Inc. plan to ride through the Taiwan crisis with second and third sources. The company has outsourcing contracts with TSMC and UMC in Taiwan. "It's difficult to assess what the business impact will be," a Motorola spokeswoman said. "We have a program called 1-2-3 for wafers and chips. If for some reason the primary supply is disrupted, we have secondary and third sources." Programmable logic device (PLD) manufacturers, such as Altera Corp. and Xilinx Inc., said they are sitting on plump inventories of their own and at distributors. Financially the present quarter is safe for most companies that use Taiwanese foundry services, said Arun Veerappan of BancBoston Robertson Stephens. "The quarter is almost done," Veerappan said. "Most companies, except those that are extremely back-ended in nature, should be able to make this quarter. The critical issue is that if the disruption goes beyond a week, the fourth quarter will be hit." The quake also will drive up DRAM prices, to the benefit of memory makers, but to the detriment of PC OEMs and other consumers of those products. "The most direct effect has been to drive up prices of DRAMs," noted William Milton, Brown Brothers Harriman. Analysts' estimates for Taiwan's share of the DRAM market range from 10 to 15 percent of global shipments. Two weeks of suspended wafer starts could result in approximately 15 million to 20 million 64Mbit DRAMs not reaching the market, according to International Data Corp. (IDC) estimates. In part due to the earthquake, spot pricing for 64Mbit SDRAM now is more than $19, up from just $12 in the beginning of September. If the pricing continues to climb it could have a negative effect on DRAM supply, IDC said. Other parts likely to come into short supply will be PC motherboard chipsets, which already were in tight supply before the quake. Taiwan commands about a third of the worldwide chipset market, according to IDC