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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: hroark2000 who wrote (32019)	2/27/2001 9:19:36 AM
From: stomper	Respond to of 65232

Samsung, Intel announce tie-up on chip production (UPDATE: Recasts, adds details, analyst comments) By Park Sung-woo . SEOUL, Feb 27 (Reuters) - South Korea's Samsung Electronics Co said on Tuesday it would cooperate with Intel Corp (NasdaqNM:INTC - news), the world's largest computer chipmaker, to boost output of high-powered Rambus DRAM chips. Under a strategic alliance, the companies will increase production of Rambus Dynamic Random Access Memory (DRAM) chips, shifting their focus from 64 M DRAMs. ``We gauged Rambus DRAMs would lead the world chip market in the coming years, and Intel needed us for its latest microprocessor Pentium 4 since we are one of the industry leaders,'' Samsung Electronics spokesman Suh Jong-kook told Reuters. There are only three chipmakers, Toshiba , NEC and Samsung which can produce Rambus DRAMs in the world market, according to analysts. Rambus Inc (NasdaqNM:RMBS - news) licenses technology to speed the performance of memory chips to DRAM makers such as Samsung. Rambus DRAMs are 10 times faster than 64 M DRAMs in memory chip performance. INTEL INVESTMENT Intel will provide needed facility investment which will allow Samsung Electronics to increase Rambus DRAM production. But Samsung did not give details on the investment amount. Samsung said it will increase its 128 megabit Rambus DRAM chip production to over 10 million units a month starting from March, from the current seven million. The Korean chip giant said it had produced a total of 700 million units of DRAMs out of which Rambus DRAMs amounted to 30 million last year. It expected Rambus DRAMs to expand to over 30 percent of its total DRAM production this year. It planned to double monthly production from the second half of this year with a target of securing half of the world Rambus DRAM market. Analysts said other chipmakers would follow suit. HELPFUL FOR SHARE PRICE The announcement did not help Samsung's share price on Tuesday, but analysts said the alliance would be a safety net for Samsung to boost its share price, which has been weak so far due to falling 64 M DRAM prices. Samsung shares ended down 2,500 won ($2.01) at 189,500. ``It (the alliance) was the right choice for Samsung. I think the increased output can contribute to Samsung's sales and even boost its stock price from the second half,'' Lee Sung-jae, a semiconductor analyst at Hanwha Securities told Reuters. Lee set the company's target price between 220,000 and 250,000 won in the second half of this year. The focus on Rambus DRAMs would also give Samsung a positive profit source as Rambus prices were around $15 per unit or about three times higher than that of 64 M DRAMs, analysts said. Lee forecast demand for Rambus DRAMs would rise from the second quarter as the output increased, allowing Intel to cut prices on Pentium 4 chips. Samsung said it expects the world Rambus market to expand to over 600 million units in 2002. ($1 equals 1246.8 Won)