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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jerome who wrote (36100)	7/28/2000 9:21:54 AM
From: Proud_Infidel	Respond to of 70976

Technology News Fri, 28 Jul 2000, 9:05am EDT Asian Chipmaker Slump May Yield Buying Opportunity (Update1) By Ian King Seoul, July 28 (Bloomberg) -- Investors who dumped shares of Asian chipmakers such as Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. over the last two weeks may be missing something. The parts shortages that have caused electronics makers such as No. 1 cell phone maker Nokia Oyj to reduce profit forecasts and investors to sell electronics shares across the board might actually point to strong demand and higher prices for the companies that make components. Korea's Samsung, the world's largest computer memory chipmaker, has seen its stock plunge 23.2 percent in the last two weeks, and TSMC, the world's largest build-to-order chipmaker, has fallen 13 percent. ``At these levels, many Asian semiconductor companies are seriously undervalued,'' said Chris Hsieh, a semiconductor analyst for Nomura Securities in Taipei. ``A couple of the leading indicators of demand have slowed down slightly, but the second quarter is normally the slowest quarter anyway.'' Hsieh forecasts that chip prices will increase in the second half of the year. He adds that recent dips in spot prices for some chips reflect the elimination of inventory rather than slow demand. ``There will be no slowing down in demand for the next 12 months,'' said Andrew Lu, an analyst at Salomon Smith Barney in Taipei. Chip Prices One of the reasons for the recent investor jitters about Korean chipmakers Samsung and Hyundai Electronics Industries Co. is the recent decline in spot prices for mainstream 64 megabit dynamic random access memory chips. DRAMs are the main memory for personal computers, servers and workstations. The spot price has fallen 3.5 percent in the last two weeks to $8.40 per chip after almost doubling since March, according to the American Integrated Circuit Exchange. Still, analysts see the slowdown as nothing more than a seasonal glitch and point to the fact that contract prices -- the rates paid by major buyers signing orders for a fixed period -- are still on the rise. Hyundai Electronics raised its average contract price to about $8 per 64 megabit 8X8 PC100 DRAM chip earlier this month from $7.50. Goldman Sachs estimates that every $1 increase in the price of the chips over the next six months will add between $400 and $450 million to Hyundai's net profit for the year. Fallout A prolonged sell-off of Asian chip shares would have a major impact on some regional stock markets and economies. Samsung accounts for roughly one-fifth of the benchmark Kospi index, with Hyundai Electronics, the world's largest memory chipmaker by production capacity, accounting for another 4.5 percent of the index. In Taiwan, TSMC accounts for 14 percent of the TWSE Index. Almost 58 percent of the Taiwanese benchmark is composed of electronics shares. The No. 1 export in both Korea and Taiwan is semiconductors. Chip sales earned Korea a record $11.9 billion in the first six months of this year and are forecast to reach $25.5 for the entire year, the Korean Ministry of Commerce, Industry and Energy said yesterday. Long-Term View Some investors remain unfazed by the drop in spot prices for DRAM chips. ``For some short-term traders, this has been an excuse to get out, but for those who like to invest over the long term, the current price levels represent an opportunity,'' said Nomura's Hsieh. Other investors agree with him. ``Its a very strong buy in my view,'' said Aaron Pong, senior portfolio manager at RBC Investment Management in Hong Kong. ``Investors are selling as they perceive the peak of the near-term rally in DRAM and they are probably right, but the longer-term bull trend will remain intact.'' A share price of ``300,000 won is a great entry level for Samsung Electronics,'' he added. Samsung shares fell 6.7 percent to 290,500 won, its lowest in almost two months. For chipmakers such as TSMC it's a similar story. ``TSMC has had to turn some orders away,'' said Salomon's Lu. ``This is not the action of a company with low facility utilization rates -- they are saying `we can't take anymore.''' Taiwan's TWSE index's largest stock, fell 2.3 percent to NT$126. In July the Bloomberg index of Asia Pacific semiconductor makers fell 17.63 percent.