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To: Richard Wang who wrote (426)	11/6/1999 2:19:00 AM
From: tech101	Read Replies (1) \| Respond to of 1056

Saturday November 6 12:03 AM ET Motorola Sees Explosive Semiconductor Demand Ahead By Emily Kaiser CHICAGO (Reuters) - Technology and communications company Motorola Inc (NYSE:MOT - news). said Friday it expects strong growth in its semiconductor segment over the next five years as demand for chip-powered wireless phones, cars, televisions and other devices soars. Ken Phillips, a spokesman for Motorola's semiconductor products segment, said the company expected the chip industry as a whole to grow by a percentage in the high teens next year, and said Motorola would likely outpace the industry. Given prospects for strong growth, he said the company now expects to post double-digit operating margins in the chip segment by the end of 2000, ahead of its earlier forecast of 2001. Motorola discussed the outlook for its semiconductor sector in a conference call with analysts Friday. Its share price soared on the positive outlook, and the stock was up 8-3/16 at 114-3/4 in late afternoon New York Stock Exchange trading. Analysts said the bright forecast helped to reassure investors that Motorola has worked through the problems that led to steep losses in its chip segment in 1998 and was well on its way to recovery. In a telephone interview with Reuters, Phillips said Motorola would focus on developing chips for four key areas: wireless communications, networking and computing, the automotive industry, and digital consumer products. Phillips said Motorola expects strong growth in each of the four markets, and projected a 30 percent annual growth rate in chips for wireless communications for the next five years and a 20 percent annual growth rate for networking chips. In 1998, Schaumburg, Ill.-based Motorola announced a sweeping restructuring and slashed thousands of jobs as its chip sector struggled with the brewing Asian economic crisis and a cyclical downturn in the North American market. Motorola's chip unit lost $1.22 billion before tax in 1998. However, the unit returned to profitability in 1999, helped by a recovery in the industry as a whole and strong demand for 'smart' phones and other devices powered by semiconductors. ``Things are looking good for them,' said Luke Szymczak, an analyst with Prudential Securities. He said the outlook discussed on the conference call ``gives more confidence in terms of potential for the semiconductor business.' Brian Modoff, an analyst with Deutsche Banc Alex. Brown, noted that Motorola planned to cut its cash outlays for semiconductor capacity by outsourcing a larger portion of its chip production and scaling back plans for new plants. ``The combination of these two efforts should reduce the company's depreciation expense while lowering cash consumption requirements and should have a positive impact on semiconductor operating margins,' Modoff said. Given the expected strong growth and margin improvement, 'we believe there is potential for significant earnings upside contribution from this (semiconductor) division, all else being equal,' Modoff said.