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

To: Tony Viola who wrote (37315)	9/20/2000 9:14:33 AM
From: Proud_Infidel	Respond to of 70976

Chip growth still strong despite DRAM dip, new cell-phone forecasts, say analysts By J. Robert Lineback Semiconductor Business News (09/20/00, 08:17:15 AM EDT) NEW YORK -- Spot-market DRAM prices will probably slip a little more before firming up in October when PC makers begin to increase their unit shipments for the fourth-quarter holiday shopping season, said analysts at Bear, Stearns & Co. Inc. during a conference call with investors on Tuesday. DRAMs--a key bellwether for the chip industry--have seen spot-market pricing fall nearly 25% since July, partly due to liquidation of inventories by PC makers and distributors after weaker-than-expected market volumes in the summer, said Bear Stearns' technology team of analysts. The slump in DRAM prices and recent adjustments in forecasts for lower volumes in cellular phones have increased concerns about the current growth cycle of semiconductors. On Tuesday, Texas Instruments Inc. joined other chip makers and system houses in trimming back its outlook for worldwide cell-phone shipments in 2000 from a previous forecast of 435 million handsets to a range of 400-to-435 million. Dallas-based TI also advised Wall Street that its chip revenues from wireless systems would be sequentially flat to slightly up in the third quarter from the prior three-month period instead of 3% growth as previous expected. But Bear Stearns chip analyst Charles Boucher said the semiconductor industry will continue strong growth through next year with a good economy and "some of the key technology driver markets--like the Internet and communications--keeping a healthy demand tail wind at our backs." During the conference call, Bearn Stearns analysts said wireless phone shipments were likely to fall short of expectations in the third quarter--about 95 million units compared to a previous forecast of 100 million. Bearn Stearns' cell-phone forecast for the fourth quarter is also on the low side of Wall Street's outlook of 110-to-140 million handset units. While many companies have backed off their "stretched" forecasts--which were pushed up to as high as 500 million cell phones in 2000--the current outlook range of 400-to-420 million "still represents around 60% growth" from 1999, noted Boucher in the conference call on Tuesday. In DRAM markets, spot prices for 64-megabit memories have slumped to the $6.60-6.80 range after peaking above $9 in July, Boucher said. A weaker-than-expected back-to-school build cycle in PCs left some manufacturers and distributors with too much inventory this summer. Consequently, those companies are selling off DRAMs in the Asian spot market, driving down prices, said analysts. "We don't think this is indicative of dramatic weakening of overall demand," Boucher assured listeners during the Tuesday call. He added that part of the problem in the summer was a shortage of low-end microprocessors, such as Duron chips from Advanced Micro Devices Inc. and Celeron processors Intel Corp. With PC-processor supply problems easing, "we expect to see [sales] momentum continue to build as we head into the strong portion of the Christmas build cycle," Boucher said. The team of analysts at Bear Stearns also said they were not concerned about the accelerated growth in semiconductor capital spending in 2000. Some estimates have placed the increase in plant investments as high as 80% over 1999. "As long as the demand environment remains robust, we believe it is going to take two years or even more of aggressive capital expenditures to really build enough capacity to propel the industry into a serious over capacity mode," said the Bearn Stearns semiconductor analyst. "I don't believe at this point, one year of aggressive spending is going to be sufficient to do that."