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To: Skeeter Bug who wrote (48751)	9/28/1999 4:49:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

Taiwan Chipmakers Seek To Allay Investors' Concerns Dow Jones Newswires TAIPEI -- Last week's earthquake in Taiwan continues to send shock waves through the global electronics industry, but some analysts say the situation with the island's chipmakers may not be as dire as feared. "We're starting to get better-than-expected reports from these companies," said Liu Chitung, a semiconductor analyst at Warburg Dillon Read in Taipei. "Compared to last Thursday or Friday, the situation is definitely better." Companies have sought to allay the concerns of customers and investors by issuing regular updates on recovery efforts. United Microelectronics Corp. said on Tuesday it expects total revenue losses in 1999 of $1 billion Taiwanese ($30 million) and a reduction in pretax profits of $400 million Taiwanese. The company, Taiwan's second biggest chipmaker, also said that less than 10% of wafers in progress at the time of the quake will have to be scrapped. In addition, Taiwan Semiconductor Manufacturing Co. (TSM), the world's largest dedicated chip foundry, said 90% of its wafer process has now been released for production. The company has said it hopes to get back to 80% wafer movement by the end of the month, but did not say when full prequake production levels could be reached. While shares in both companies plunged for the second straight session on Tuesday, others showed signs of bottoming out. Two leading memory chip makers, Mosel Vitelic Inc. and Winbond Electronics Corp., bounced back from intraday lows. Mosel ended unchanged at $30.90 Taiwanese, while Winbond closed at $54.50 Taiwanese, down from $55.50 Taiwanese on Monday but off an intraday low of $54.00 Taiwanese. "Mosel looked pretty strong at the end," said the chief dealer at one foreign bank in Taipei. "You're seeing signs of a rebound." Taiwan's chipmakers play a pivotal role in the global electronics industry, accounting for around 10% of the world's finished semiconductor production. The island ranks as the fourth-largest semiconductor manufacturing center. Efforts to get production at chipmakers back on track took a big leap forward over the weekend with the restoration of full power to the Hsinchu Science-based Industrial Park, the island's high-technology hub. Companies, fearful that poisonous gases had leaked into clean rooms from damaged pipes, had lacked enough electricity to start up ventilation systems and start the testing and recalibration of highly sensitive equipment, analysts said. But despite the restoration of power to the park, other problems threaten to derail companies' recovery efforts and delay considerably a return to full production, analysts said. None of the companies has reported structural damage to manufacturing facilities, but most have said that quartz tubes used to relay wafers from one process to another were either broken or damaged by the quake. "The major thing that's holding them back right now is the quartz tubes," said Andrew Lin, an electronics analyst at Jardine Fleming in Taipei. "There's a big shortage." That scarcity will hamper companies' efforts to get back to normal production, said Lin, who reckons chipmakers will lose the equivalent of their August revenue and that the losses will be spread over the next two months. Still, industry giants such as TSMC and UMC are less likely to be hurt by the quartz tube shortage. "TSMC is one of the biggest buyers in the world, so they'll have a lot of bargaining power," said Don Floyd, regional electronics analyst at Credit Lyonnais Securities in Taipei. "It's the little guys who may have trouble." Analysts estimate that total losses incurred by Taiwan's semiconductor companies will range from $200 million to $300 million. But despite last week's devastating quake, the most destructive in dollar terms to hit the island this century, analysts say the island's chip industry will still be able to limit the losses. "Companies will lose anything from 10 days to 20 days of production," said Andrew Lin, an electronics analyst at Jardine Fleming in Taipei. "But they'll make up for the lost production by raising prices."