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To: Skeeter Bug who wrote (49286)	10/15/1999 9:04:00 AM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

Analysts Expect Skid In DRAM Chip Prices To Be Nearing Bottom Friday, October 15, 1999 07:48 AM ET By Dermot Doherty, Staff Reporter TAIPEI -(Dow Jones)- Market prices for dynamic random access memory, or DRAM, chips in Taiwan are expected to approach a bottom in the coming week after sliding from dizzying heights in the wake of last month's earthquake, industry experts said. Eight-inch 64 megabit DRAM chips, the industry standard, are trading around $13 a chip on the spot market in Taiwan, compared with $14 the previous week, according to vendors. "This is in line with expectations," said Abraham Leu, a semiconductor analyst at Societe Generale in Taipei. "No one believed the big gap between the contract and spot prices could stand." DRAM spot prices soared to more than $20 in the aftermath of the Sept. 21 quake, which cut power and halted production at chipmakers in the Hsinchu Science-based Industrial Park. Since then, DRAM prices have lost ground due to reduced shipments of persoan computers and the unwillingness of PC makers to place large orders with prices at unnaturally high levels, industry experts said. Still, the downside is limited, given the onset of the peak season for PC makers, they said, and pricing should find support in between $10 and $12 a chip. "Contract prices are moving toward $10," Leu said, "so it doesn't make sense for spot prices to fall below that level." That still translates into healthy profits for local chipmakers, analysts noted, since each 64-megabit chip costs about $6.50 to make. Much of the recent softening in DRAM prices has also been due to a dearth of motherboards following the earthquake, Taiwan's most costly in dollar terms, some industry insiders say. "With motherboard supply tight, demand has been quite weak," said one official at a local DRAM vendor. "But we are near the bottom in terms of pricing because it is the peak season and DRAM supply itself is still not that strong (after the quake)." Taiwanese electronics companies account for more than 85% of global motherboard output, compared with about 15% of all DRAM production. The island is the world's fourth-largest producer of semiconductors. Analysts said the motherboard shortage could be especially acute at the end of October as inventory supplies dry up, but that shortfall should improve by mid-November. Meanwhile, a ruling by the U.S. Department of Commerce on Thursday that local chipmakers dumped DRAM chips in the U.S. market and the proposed imposition of antidumping duties on Taiwan chipmakers aren't seen hurting the local chip industry, analysts say, since the U.S. accounts for less than 5% of direct DRAM shipments. © 1999 Dow Jones & Company, Inc. All Rights Reserved.