I know there are many on this thread who think Jim Cramer is a dolt. Like him or not, TheStreet.com has some good stuff (actually it's RealMoney.com that has the good timely stuff).
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Bully for Asia!
By Steven Nagourney
Special to TheStreet.com
8/15/00 5:47 PM ET
Things are going awfully well in the information technology sector in Japan and the rest of Asia. Second-quarter data, in fact, confirms the ongoing economic recovery, led by corporate investment.
On Monday, industrial production in Japan was revised upward for June to a 1.9% increase month over month from the preliminary figure of 1.7%. And industrial production for the second quarter also was better than expected, increasing 1.7%, slightly above preliminary figures.
On Tuesday, the Bank of Japan's monthly report for August noted the economy is recovering gradually, with corporate profits and investment in business increasing.
To me, the bullishness in technology was underpinned from the start on Monday when the Gartner Group (IT.B:NYSE - news - boards) reported that the worldwide supply of DRAM microchips will fall far short of demand in the second half of the year.
It predicted that the average unit price of 64 Megabyte DRAM microchips for all of 2000 could reach $8.29, and consequently many DRAM makers are expected to generate strong fourth-quarter profits. Prices could even reach the sums makers saw during the previous three quarters, with the average DRAM unit price climbing to $10.30 in the second half of the year. DRAMs sold for an average of $5.70 in the first half.
In Taiwan, several DRAM makers, including Winbond Electronics, Mosel Vitelic, Powerchip Semiconductor, Promos Technologies and Vanguard International Semiconductor, are pricing their 64 Mb DRAMs at $8.50. And they will probably scale up to $9 in September. Analysts expect the unit price for 64Mb DRAMs to rise above $10, or even to $11, in the fourth quarter.
Dataquest confirmed an estimate for lower DRAM supplies starting with the third quarter. According to their estimates, the supply of 64 Mb DRAM chips in the third quarter will reach only 1.07 billion units, 3% shy of estimated demand. In the last quarter, Dataquest expects demand for 64Mb DRAM to surge to 1.42 billion units.
The Next Step in Chip Demand
Figures released Tuesday showed that orders for Japanese-made semiconductor manufacturing equipment totaled ¥228.83 billion ($2.09 billion) in June, up 140% from a year earlier and rising for an eighth consecutive month.
June orders for chipmaking equipment for use in Japan, including foreign-made equipment, also rose a steep 121.6% year-over-year to ¥131.37 billion.
Of Tokyo Electron's total sales of semiconductor equipment, sales of equipment for 300 millimeter wafers were less than 10%, and most such equipment was shipped for use on testing lines. The company is in the process of developing its semiconductor manufacturing equip for 300 mm wafers based on 0.13 micron elements.
The wafer is the base material used chipmaking, a slice of a salami-like silicon crystal up to 300 mm in diameter. The bigger wafer -- 300 mm (12 inches) instead of the current 200 mm (8 inches) -- substantially boosts the yield of semiconductor fabrication plants. Moreover the 0.13 micron element size, nearly one-third smaller than the current 0.18 micron standard, permits many more transistors per chip. With such moves, leading chipmakers will start constructing production lines for mass-producing the 300 mm wafer in 2001, and then start producing them full-scale between the end of the second half of 2001 and the first quarter of 2002.
Keep in mind that some chipmakers are delaying their shift to production of 300 mm wafers because they are producing various other types of chips, or they don't need to produce 300 mm wafers, yet. As a result, migration to 300 mm wafers will proceed step-by-step, and will take about five years to complete.
AMD Joins The Parade
In related news, chipmaker Advanced Micro Devices (AMD:NYSE - news - boards) said Monday it began shipping its 1.1 gigahertz processors to major computer companies, and said it expected to meet its goal of doubling shipments of seventh-generation PC processors to 3.6 million units in this quarter, and expects to double shipments again to 7.2 million units in the fourth quarter.
The company said its overall PC processor shipments could approach seven million units this quarter, and nine million units in the next. Its new 1.1 GHz Athlon will reportedly be in computers reaching the market as early as Aug. 28.
And Linux Makes More Inroads
Meanwhile, VA Linux Systems (LNUX:Nasdaq - news - boards) has seen a dramatic increase in new license shipments, growing from 15.8% of server operating system shipments in 1998 to 24.4% in 1999. Most server operating system vendors other than Microsoft (MSFT:Nasdaq - news - boards) are losing market share.
And on Tuesday, Red Hat (RHAT:Nasdaq - news - boards) and IBM (IBM:NYSE - news - boards) announced that they are tightening their alliance, agreeing to develop and sell new versions of IBM software atop Red Hat's Linux.
As a result, Red Hat and IBM will put funding into a market development fund, and programmers from both companies will work to make sure Red Hat's version of Linux meshes with IBM's DB2 database software, its Lotus Domino software, its Tivoli management software, its WebSphere e-business software and its small-business pack for Linux. |
