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To: Steve Lee who wrote (52130)	11/22/2000 1:34:10 AM
From: DJBEINO	Respond to of 53903

Korean chipmakers shift to high-speed semiconductors By Nam In-soo SEOUL, Nov 22 (Reuters) - South Korea's major chipmakers are expanding output of high-performance memory products and investing in non-memory or slower-speed chips despite risks over uncertain growth in the global semiconductor market. The world's largest computer memory chip supplier Samsung Electronics said on Wednesday output of dynamic random access memory (DRAM) chips with density of 128 megabits and above had overtaken that of less powerful chips in the third quarter. ``The current mainstay, 64M chips, account for some 40 percent of (Korea's) total DRAM output, while 128M and other high value-added products take the remaining 60 percent,'' James Chung, a Samsung Electronics spokesman, told Reuters. He said Samsung, which controls more than 20 percent of the global DRAM market, would further cut the proportion of 64M DRAMs -- memory chips used in products like personal computers. High-speed or high-density chips are used in products like personal digital assistants and hand-held computers. Samsung and other DRAM makers, such as rival Hyundai Electronics Industries , want to be less vulnerable to cyclical downturns in the chip market by shifting to high-value added products. Lee Yun-woo, president and CEO of Samsung's semiconductor business said in October: ``Given the sluggish demand for 64 megabit DRAM chips, Samsung is switching to high value-added products such as flash memories used in mobile phones, 128M DRAMs and 256M DRAMs.'' PC SALES SLOWDOWN HITS CHIPS Lee expects the global chip market to grow to $336 billion in 2002 from $170 billion in 1999, although gluts in the DRAM market were expected to last until the third quarter of 2001. The weak demand for DRAMs was caused by historically slow PC sales, which in turn stemmed from a slow transition to new Windows 2000 operating software from Microsoft (NasdaqNM:MSFT - news). Sluggish demand in the global PC market prompted Taiwan microchip maker Mosel Vitelic to slice its pre-tax profit forecast for 2000 by 55 percent to T$5.19 billion and the sales forecast by 22 percent to T$27.85 billion. Overshadowed by concerns about slowing chip demand, Samsung shares have dropped 40.6 percent year-to-date through the close on Tuesday, while Hyundai Electronics has slid 71.2 percent over the same period. By comparison, the benchmark Korea Composite Stock Price Index is down 48.31 percent. EYES TURN TO NON-MEMORY Samsung's double-pronged approach also involves expansion of non-memory, or logic chips. It said in September it would invest 3.84 trillion won ($3.33 billion) by the end of 2003 to build three new fabrication plants (fabs), including one dedicated for non-memory chips. The non-memory chips facility would make system LSI and application-specific integrated circuit (ASIC) chips. Samsung expects sales in the non-memory sector to increase from this year's expected $1.7 billion to $3 billion in 2002 and $5 billion in 2005. ``Fine design technology is the key in the semiconductor world,'' said Jon Chong-hwa, an analyst at KEB Salomon Smith Barney Securities. ``But Korea has neglected research and development in the non-memory sector.'' HYUNDAI TO FOLLOW SUIT Hyundai, the world's largest DRAM chip manufacturer in terms of capacity, is also focusing on high-density semiconductors. ``We plan to raise production of 128M chips to 40 percent of total DRAM output by the first quarter of next year from 35 percent now,'' said Hyundai Electronics spokesman Lee Yong-il. He estimated monthly shipments of 64M DRAM chips will drop to 41 million units in December from 50 million in January, while output of 128M chips will grow to 15 million by the end of this year from 2.5 million earlier this year. ``Demand for high-density products is growing with the rapid spread of digital appliances, including set-top boxes, and high-power computers,'' he said. Hyundai said it would also expand its non-memory business with planned investments of up to 400 billion won by end-2001. The company said in June it intended to raise its proportion of non-memory chip sales to 20-25 percent of total chip sales in 2001 compared with 10 percent in 2000. Hyundai said it had no immediate plans to expand chip production facilities, although it expected steady growth in demand for DRAM chips until 2002. biz.yahoo.com