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Technology Stocks : Novellus -- Ignore unavailable to you. Want to Upgrade?

To: Alan Gallaspy who wrote (3107)	12/8/2000 7:11:16 AM
From: Platter	Read Replies (1) \| Respond to of 3813

Business Week reported in its ``Inside Wall Street'' .... Novellus Systems Inc. (NVLS): The semiconductor-equipment maker's shares could more than double to $78 in a year as it sells more products, Business Week reported in its ``Inside Wall Street'' column, citing Graham Tanaka of the Tanaka Growth Fund. Novellus fell 13/16 to $29 3/16. from bloomberg.com

To: Alan Gallaspy who wrote (3107)	12/15/2000 9:56:03 AM
From: Alan Gallaspy	Read Replies (1) \| Respond to of 3813

UMC is a huge Novellus customer, here are some of their plans for expansion. Note also that Infineon/Siemen's is making yet another commitment to 300 mm technology, even as demand is growing more slowly. It makes me wonder, will they be the early adopter that takes all the lumps for working out the bugs, or will they make it (300 mm) work well and emerge with market share/profits? Do we also see here that mainline semi companies are seeking to develop closer relationships with leading edge foundries by infusing money and leading edge technology? WIRE:12/15/2000 05:41:00 ET UMC, Infineon in $3.6 Billion Chip Venture SINGAPORE (Reuters) - United Microelectronics Corp (UMC) of Taiwan said on Friday it will make the biggest single investment in Singapore"s semiconductor industry by leading a $3.6 billion project to build a 12-inch wafer plant. The world"s second largest microchip foundry has signed a memorandum of understanding with Infineon Technologies AG The Singapore government is also invited to join. Infineon, a microchip unit of Germany"s Siemens, agreed to take 30 percent of the venture which will operate as a UMC unit, UMC executives told a news conference in Singapore. UMC Group Chairman Robert Tsao said other potential investors had also been approached but gave no further details. Tsao said despite current market uncertainties, the investment would meet expected increases in semiconductor demand in 2002, when conditions were likely to improve. The wafers allow more efficient production of the microchips used in personal computers, telephones and game machines. Singapore"s granting of "pioneer status" to the project means it would receive a tax holiday of between five and 10 years. But some analysts questioned the timing of the big expansion. "UMC"s business couldn"t be immune from the slowdown in the global PC demand," said Eddy Chen, manager of the T$600 million Exports Fund at Capital Securities Investment Trust in Tapei. "The company"s production will increase but the oversupply problem will likely become more serious if demand fails to pick up," he said, projecting UMC will earn T$4 per share in 2001, down from T$4.5 per share estimated for this year. COUP FOR SINGAPORE Singapore was picked over other venues because of its political stability, infrastructure, assessibility to worldwide technical talent and tax incentives, UMC officials said. Chris Chi, senior vice president, told reporters that UMC had explored the possibility of starting up plants in the United States, China and Europe as customers had expressed concerns about its exposure to earthquake-prone Taiwan. He said it was important to concentrate resources in one place to benefit from economies of scale. Asked if Singapore would become a key site for UMC, Chi said: "Certainly, that"s in our evaluation." But he said it remained to be seen whether Singapore"s workforce would be able to compete with Taiwan"s productivity. Singapore"s electronics sector is the strongest pillar of its manufacturing economy and accounts for 50 percent of output. Short of natural resources, the tiny city state has doled out generous incentives to attract top multinationals, saying it now hosts 10 of the top 20 semiconductor companies in the world. "This project has given strong endorsement to Singapore"s competitiveness to attract world class knowledge-intensive industries," Philip Yeo, chairman of the Economic Development Board, told reporters. He said UMC and Infineon -- like the government -- strongly believed that when the plant was fully operational, world demand for advanced semiconductors would be robust for years to come. SECTOR NOW UNDER CLOUD A string of profit warnings from U.S. high-tech giants has cast doubts over the sector"s outlook. Shares in UMC fell nearly two percent early on Friday on overnight losses in the tech-laden Nasdaq market and lingering concerns over the foundry industry"s near-term outlook. But they recovered to end unchanged at T$51, outperforming a 1.79 percent fall in the wider TAIEX market. "This is quite positive in the long-term for UMC. But as the venture will not turn profitable until the second half of 2003, the market was reacting to worries over UMC"s near-term outlook," said Rick Hsu, semiconductor analyst of Nomura Securities. Andreas von Zitzewitz, chief operating officer of Infineon Technologies, said his firm "will benefit from the significant cost advantages of (12-inch) manufacturing." UMC BUILDS ON PLANTS IN TAIWAN, JAPAN The venture, to be located in Singapore"s Pasir Ris Wafer Fab Park, would be built in two phases starting from the first quarter of 2001, with total capacity of 40,000 wafers per month. It was unclear when the final agreement would be signed, but the partners hope to have equipment moved in for the first phase sometime in the third quarter of 2002. UMC has eight plants in Taiwan and is building a 12-inch wafer plant in the south which will be ready in the first quarter of 2001. It also has two plants in Japan, one a joint venture with Hitachi Ltd., producing 12-inch wafers. Hsu of Nomura Securities said he recently cut UMC"s 2001 earnings per share forecast from T$5 to T$7, but saw strong support at around T$49. "Visibility is low for the foundry industry now. UMC"s utilization rate could fall to around 90-92 percent in the first quarter of next year from the current 98-100 percent due to slowing demand," Hsu said. "We maintain an "outperform" rating for UMC," he said, adding that UMC could rebound to T$74 within the next 12 months. (With additional reporting by James Peng in Taipei)