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To: Ram Seetharaman who wrote (8533)	9/23/2000 7:52:12 AM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

Warning by Intel brings (taiwan)chips down ROLLERCOASTER RIDE: Analysts said yesterday's drop in shares for top chipmakers was an overreaction and that the drop provides investors with bargain opportunities By Thomas Ker Shares in Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp fell almost limit down yesterday after US-based Intel Corp announced its first profit warning in two years. TSMC and UMC, the world's two largest producers of made-to-order computer chips, are considered Taiwan's bellwether shares of the semiconductor industry. Both companies reported, however, that demand for their foundry services remains strong and analysts said the market overreaction had created a good buying opportunity for the companies' shares. "Intel is talking about its CPU and chipset products," said a UMC official. "Those parts don't take up much of our product combination." TSMC shares fell the limit 7 percent to NT$106.5. UMC fell 6.94 percent to NT$67. In February, shares in TSMC were trading for as high as NT$222 per share. The shares fell after Intel said Thursday its third-quarter revenue was expected to be below the company's previous expectations. Intel announced the revenue warning because of weaker than expected demand in Europe. But UMC said yesterday the company had already foreseen this trend and adjusted its product combination accordingly. "This year, communications products are more profitable than PC products," the UMC official said. "PC products are not so important." Communications-related chips constituted about 40 percent of the company's sales volume this year, he said. Guo Shan-shan, a spokesman for TSMC, also said that communications chips have become more important for TSMC. "The most significant growth for our company has been in the manufacture of chips for communications services," he said. Officials at both companies also said foundry capacity is full and insufficient to meet demand. Neither company has noticed any change in orders or downturn in the semiconductor industry. Nor have analysts who specialize in the foundry industry. "All in all, the semiconductor situation is still very good," said Ken Chang, a semiconductor analyst at China Securities Co. "The global growth rate of PCs next year is about 14.5 percent, according to my model, and demand for communications products is continuing to grow," he said. Intel's profit warning may be the cue for overvalued global IT stocks to undergo a correction in their share prices. However, the worldwide fall in technology stocks yesterday -- irrespective of their particular sector in the technology industry -- is being interpreted by analysts as an overreaction. "If you look at the product mix of TSMC and UMC in terms of their PC-related and CPU-related product mix, it's no more than 30 percent or 40 percent," said Raymond Wu, an analyst at Entrust Securities. "So for their price to fall like this is because of superficial information," he said. But now that the companies' share prices have fallen, investors should take the opportunity to buy them while they are cheap, analysts said. "In the short term, it's a very good time to invest, particularly in these two stocks, based on their capacity utilization and their competitiveness among foundries worldwide," Wu said. "The market is quite emotional at this time; maybe in another week or so, investors will go back to the fundamentals." TSMC reported its expected numbers for the year less than two weeks ago. Net income for this year will rise to NT$64 billion, or NT$5.61 per share, the company said. taipeitimes.com

To: Ram Seetharaman who wrote (8533)	9/23/2000 2:12:50 PM
From: Czechsinthemail	Read Replies (1) \| Respond to of 9582

Re: Intel There are several mitigating factors in the Intel situation including their ability to use investment gains to cover disappointing results from operations. But there are also significant problems. They are facing much more serious competition from AMD, they are no longer so seriously capacity constrained, and a weak euro doesn't help. I think trying to pin it on Europe is a bit of a smoke screen for more systemic problems. But the main problem with INTC was an inflated stock price. For years, funds and individuals alike were using it as a one-decision stock, assuming that the stock price would appreciation continue inexorably. As long as the buy and hold consensus held, this game plan worked. Everyone knew and trusted Intel as a sure-fire winner. The result was a stock price that kept going up with an increasingly large PE even as its rate of growth slowed. Though it is certainly possible that many investors will return to Intel simply as an act of faith, others will require more proof of performance before coming back. IMHO, it is not difficult to find much better values elsewhere.