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To: Cooters who wrote (18733)	1/27/2001 4:50:17 PM
From: puborectalis	Read Replies (2) \| Respond to of 60323

Toshiba Sees Chip Prices Recover REUTERS INDEX: TOP STORIES \| INTERNATIONAL \| BUSINESS \| TECHNOLOGY By REUTERS Filed at 4:20 p.m. ET DAVOS, Switzerland (Reuters) - Toshiba (6502.T), Japan's largest chip maker, said on Friday it expected prices for memory chips to climb from their current troughs and said it would reduce investments in new plants compared with 2000. Chairman Taizo Nishimuro told Reuters in an interview at the sidelines of the World Economic Forum that he expected prices of the most commonly used DRAM memory chips to climb from their current hurting level of around $3. The same chips were trading at $9 apiece last summer. ``DRAM prices have bottomed out. I really think that in the second quarter or the second half a resurgence will take place,'' Nishimuro said. He also said that Toshiba, which generates around 30 percent of its business from memory chips, would change the mix of its memory products to higher value memory semiconductors. ``It is our clear preference to steer away from common DRAM. We would rather like to shift to Flash memory and Rambus chips,'' he said. DRAM should only generate 15 percent of Toshiba's total chip sales,'' Nishimuro added. Investments in new factories, which are partly blamed of having distorted the fragile balance between demand and supply last year, will be restricted to 15 percent in 2001, he said. The industry's average for 2000 and 2001 is expected to be a little over 20 percent. ``Capital expenditure will be approximately 15 percent (of sales) in 2001,'' Nishimuro said. The company invested 20 percent of sales in 2000, a percentage that was upped during the year from 15 percent as upbeat demand forecasts were issued. However, as the year drew to a close, demand expectations for mobile phones, telecom systems and computers proved to be far too optimistic, leaving the industry stuffed with inventories which have hurt chip sales prices. TOSHIBA WILL LAUNCH HANDHELD COMPUTERS THIS SUMMER On the demand side he noted that the personal computermarket had fallen back to single digit growth and that his company, which is also one of the world's largest notebook computer makers, would venture in new hot growth markets to offset declining PC growth. ``We will diversify in PDAs (personal digital assistants),'' he said, revealing that the first handheld computer the company would launch this summer was likely to be based on Microsoft's Pocket PC operating system. Although Toshiba had not taken a decision yet, and was also looking at the operating system of Palm (PALM.O) which controls 90 percent of the handheld computing market, Microsoftwas aggressively looking to enter this new growth market, he said. ``We're leaning toward Microsoft (software),'' Nishimuro said. MOBILE PHONE ENTRY IN EUROPE On its cooperation with Germany's electronic conglomerate Siemens (SIEGn.DE), with which it will jointly develop third generation mobile phone technology, Nishimuro said he hoped to enter the European market with an i-Mode mobile phone. This Japanese mobile Internet service, which is a wild success there, will soon be rolled out in Europe on the back of Netherlands-based KPN Telecom (KPN.AS) which has an alliance with Japan's mobile operator NTT DoCoMo (9437.T) and Telecom Italia Mobile (TIM.MI). As no European mobile phone maker was currently selling i-Mode phones, Asian manufacturers stood a good chance of receiving orders from the two European mobile operators which target a market of 165 million consumers. ``We wish to do that. We'd like to talk to KPN,'' he said. Toshiba has around 10 percent market share in its home market for mobile phones. Meanwhile he expressed sympathy for Swedish mobile phone company Ericsson (LMEb.ST) which said on Friday it would outsource all manufacturing of its mobile phones in an attempt to bring that business back to profitability. ``We outsource ourselves, but we keep technology and design capabilities to ourselves,'' he said. He added that Toshiba did not outsource production of mobile phones.