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To: Win Smith who wrote (70904)	4/25/2001 12:30:00 PM
From: Don Green	Read Replies (1) \| Respond to of 93625

Taiwan chipset companies suffer losses By Faith Hung, EBN Apr 25, 2001 (9:16 AM) URL: ebnews.com TAIPEI, Taiwan -- A slowdown in the PC market pushed the first-quarter results of two of Taiwan's largest chipset makers into the negative territory. Acer Laboratories Inc. lost US$4.2 million between January and March, while Silicon Integrated Systems Inc. suffered losses of $5.2 million, according to statements from the companies. In the year-ago period, SiS had net income of $17.7 million. “Stiff competition led to deep price cuts for chipsets in the first quarter, dropping 10% - 15% sequentially,” said Thomas Hou, an analyst at BNP Paribas Peregrine Securities in Hongkong. “We won't see the situation to improve until the second half of this year.” Ali and SiS, both based in Taipei, together hold about a 25% market share worldwide. They compete with Via Technologies Inc. of Taiwan as well as Intel Corp., Santa Clara, Calif. In the first quarter, SiS was dragged down by $7.6 million in non-operating losses. The company, which is running a new 200mm wafer fab on the island, wrote off $3.0 million in inventories and paid interest of $4.5 million for the bank loans SiS borrowed to build the facility. “One of the underlying problems for SiS is that it's costing dearly to operate the fab at a time when the IC industry remains at doldrums,” said Eric Chen, a SG Securities Co. analyst. For this year, he predicted the plant's depreciation would cost $106 million, in addition to the $76 million in operating expenses. Ali, the design arm of Taiwan's Acer Group, said its poor performance was in part due to an operating loss of $1 million. A lower-than-expected shipment of DVD player chipsets to the Chinese market and the slack demand for Aladdin Pro 5 chipsets also contributed to the result, analysts said. Compared with its Taiwanese rivals, Via is expected to post profits of $70 million in the first quarter, some analysts said. “VIA benefited from Advanced Micro Device Inc., whose market share gained at the expense of Intel,” Chen said. “VIA bundled its chipsets with AMD's Athlon and Duron processors, which has proved to be a successful strategy.” Taipei-based Via is slated to announce its first-quarter earnings as soon as this Friday. Earlier this month, it said sales during the period jumped to $314 million, a record level. Looking ahead, Ali and SiS are hoping seasonal strong demand in the second half of the year will shore up their sales and earnings. The driving force for Ali's hopes is the double date rate (DDR) SDRAM platform and its CyberMAGik chipsets, which are used in notebook PCs and are compatible with AMD's CPUs, analysts said. Ali forecasts to earn $3.7 million in the third and fourth quarters combined, reversing the $7.5 million losses during the first half of 2001. SiS anticipates its shipments will hit 59,000 8-in. equivalent wafers in the second quarter, 72,000 in the third and 80,000 in the fourth, jumping from 39,000 in the first.