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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Petz who wrote (86658)	1/12/2000 3:38:00 AM
From: tejek	Respond to of 1572598

Petz, an addendum to the report you posted earlier: ____________________________________________________________ Electronics Prices Expected To Rise By MICHAEL WHITE .c The Associated Press PEBBLE BEACH, Calif. (AP) - Consumers will pay more for electronic goodies over the next two years because of a squeeze in computer chip supplies. The cost of some memory chips has more than doubled in recent months, and the supply squeeze probably will continue through 2002 until new production plants come online, analysts said Tuesday. ``Bad news for shoppers, great news for the industry,' said G. Dan Hutcheson, president of VLSI Research Inc. in San Jose. ``What we will see with these higher prices is it will fund things like breaking the Internet bottleneck, increase bandwidth,' Hutcheson said in an interview. Analysts suggested the higher prices could lead to better and ultimately less expensive products as companies invest in more efficient manufacturing techniques. ``It's a bitter pill, but it will be better for the health of everybody,' Hutcheson said. VLSI and other research companies released new chip industry forecasts at a symposium sponsored by Semiconductor Equipment and Materials International. The trade association represents 2,300 companies that make the equipment and materials used to manufacture memory chips, microprocessors and logic chips used in computers, Internet circuitry, cell phones, televisions and other devices. VLSI predicted chip sales would grow at a 25 percent pace in both 2000 and 2001, up from 18 percent in 1999. Dataquest Inc., another research firm, expects industry revenues to grow 22 percent to 25 percent in 2000, from $160 billion in 1999 to $195 million to $200 million. The company forecasts a similar increase in 2001. IC Insights predicts 22 percent revenue growth in 2000 and 2002, with the expansion slowing to 17 percent in 2003. Neither VLSI nor Dataquest provided figures for how high tightening supplies would push prices at the retail level. Analysts said, however, that manufacturers mostly likely would either raise costs or change the mix of features offered in their products. ``What constitutes a standard system, that's what will change,' said Clark Fuhs, an analyst with Dataquest Inc. Some product downsizing already has occurred. Systems that included 128 megabytes of computer memory six or eight months ago now come with 64 megabytes, Fuhs said. Gateway Inc. announced on Monday it will buy microprocessors from Advanced Micro Devices, an Intel competitor, because of a shortage of Intel chips. The decision came after Gateway , the No. 2 direct seller of PCs, warned that it won't meet fourth-quarter earnings forecasts because it couldn't get enough chips from Intel. Demand is up not only in the United States and Western Europe but in Asia and other regions as the world's economy recovers. Analysts compared the current situation to 1994 and 1995, when prices soared and manufacturers built new chip factories to meet consumer demand worldwide. The result, however, was an oversupply that caused prices to crash in 1996. Moshe Handelsman, president of Advanced Forecasting Inc. in Cupertino, said a downturn could come as early as the second half of 1999. ``What they are celebrating now is the upswing. What we are saying is, be careful,' he said. AP-NY-01-12-00 0134EST Copyright 2000 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.