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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Estephen who wrote (66878)	3/1/2001 11:19:08 PM
From: Don Green	Read Replies (1) \| Respond to of 93625

Toshiba executive cautious on chip market rebound By Edmund Klamann TOKYO, March 1 (Reuters) - The global chip market will likely rebound later this year with a pick-up in the U.S. economy, but growth will be modest, said a top semiconductor executive at Toshiba Corp <6502.T>, the world's second-biggest chipmaker. "The first half will be no good this year," Yoshihide Fujii, general manager of strategic planning for semiconductors at Toshiba, said in an interview. But he expected a turnaround in the middle portion of the year, bringing about five percent growth for calendar 2001 as a whole. That compares with robust growth last year, estimated by research firm Dataquest Inc at 31 percent. Fujii said Toshiba aimed to outperform the global market, boosted by production of processors for Sony Corp's <6758.T> popular PlayStation 2 game console and memory chips for cell phones, digital cameras and digital audio devices. For the business year starting in April, he was looking for growth in Toshiba's chip business of 11 to 12 percent, compared with eight percent for the industry as a whole -- a bit better than the calendar-year figure given an expected mid-year pick-up. While many others in Japan were more optimistic with double-digit estimates for industry-wide growth, even his cautious outlook faced downside risks, he said. "I don't deny that the U.S. economy could get worse, although personally I think it will head into gradual recovery," he said. Harder to gauge, he said, was the Japanese economy. While he expected it would take its cues from trends in the U.S. economy, it could slump severely if financial instability flares or stock prices fall much further. The beleaguered benchmark Nikkei share average <.N225> closed at a 15-year low on Thursday. A key challenge for Toshiba will be the memory chip business, with DRAM chips, accounting for about 15 percent of semiconductor revenues, set to fall into the red in the latter half of the current business year to March 31. HIGH HOPES FOR NEW CHIPS DRAM prices have fallen sharply since late last summer, and while Fujii believed Toshiba's DRAM operations could return to the black next year, he did not hold high hopes. "We don't see DRAMs as a major source of profits," he said. Soft prices for the chips, along with a slump late last year in the U.S. and Japanese PC markets, forced Toshiba and rival NEC Corp <6701.T> to issue profit warnings last month. Toshiba has decided to shift much of its DRAM production to more expensive Rambus DRAMs, which use technology from Rambus Inc that substantially speeds up chip performance. Toshiba aims to boost Rambus DRAM output to eight million units a month by September from 2.3 million now, based on a 128 megabit equivalent, while synchronous DRAM output will be cut to 4.5-5.0 million from 10 million and mostly consigned to Taiwan chip foundry Winbond Electronics Corp <2344.TW>. But adversaries NEC and Samsung Electronics Co <05930.KS> are also planning to boost Rambus DRAM production and Fujii did not rule out the possibility of oversupply. About half of Toshiba's current Rambus DRAM output is used in Sony's PlayStation 2 to generate three-dimensional graphics. The game console has been enthusiastically received by consumers, although production glitches forced Sony to cut estimated shipments in the current business year by 10 percent. Fujii said Toshiba's production of processors, however, had gone more smoothly than expected and did not play a role in the problems plaguing the PlayStation's first year on the market. The Sony connection also gives Toshiba a stable source of Rambus DRAM demand, although added sales of the high-speed memory chips will depend heavily on chipsets for Intel Corp's new Pentium 4 processors, launched in November last year. Fujii said Toshiba would benefit from strength in NAND flash memory, a particularly compact chip used in digital cameras and digital audio players and a probable component of next-generation cell phones. "This area hasn't grown as much as we anticipated, but we are not alarmed," he said. (With additional reporting by Reed Stevenson) REUTERS