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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (48363)	6/22/2001 2:34:51 PM
From: Proud_Infidel	Respond to of 70976

Micron CEO says DRAM balance is possible with additional fab cutbacks or new demand 'It won't take a whole lot' to end oversupply in market, states Appleton By Jack Robertson EBN (06/22/01 11:06 a.m. EST) BOISE, Idaho -- DRAM production capacity has been reduced in the last several months by many memory chip makers, and more cuts in output may be coming, according to Steve Appleton, chairman and president of Micron Technology Inc. here. Despite some predictions that it could take more than a year for troubled DRAM markets to recover, Appleton told investment analysts on Thursday that "it won't take a whole lot of additional capacity to come off line to bring DRAM supply into balance with demand. The Micron executive added that a pickup in DRAM demand could also create the same supply balance in the market. Appleton made that prediction in the conference call after his company posted an after-tax net loss of $301 million on net sales of just $818.3 million in Micron's fiscal third quarter, ended May 31. The company's sales fell 24% from the prior quarter mostly because of a 35% drop in average selling prices for memories (see June 21 story). Also on Thursday, a new forecast from Dataquest Inc. was released, calling for a 55.5% drop in total DRAM revenues to $14 billion in 2001 from $31.5 billion last year. Dataquest called the drop the worst in DRAM history and said major suppliers must reduce their production if they hope to end the sharp recession (see June 21 story). Appleton said Micron itself expects its own DRAM production bit growth percentage "to be in the teens" for the firm's current fiscal fourth quarter, which concludes at the end of August. He attributed this to increased yields resulting from the firm's continued die shrink transition to 0.15-micron processes. The Micron chairman said the firm's wafer fabs will be fully at 0.15-micron capability by the end of the year and starting to move to 0.13-micron processing at the beginning of 2002. But at the same time, Micron is re-examining the pace at which its foreign fabs transition to 0.15-micron wafer processing. "All our overseas fabs have some 0.15-micron production. But we stretch out the transition [in offshore Micron fabs] depending on market conditions. We don't want to spend money on capital investment, if the market doesn't need the increased capacity." Appleton said Micron chip production is split about 50-50 between its Boise fabs and its overseas fabs. Asked if the sharp drop in DRAM prices was made worse by Hynix Semiconductor Inc. flooding the spot market with chips, Appleton was uncharacteristically charitable to the South Korean competitor (which was formally called Hyundai Electronics). "All of us have been trying to sell all that we can. We all have inventory that we are trying to sell. I don't think Hynix has impacted the market" more than any other DRAM maker, the Micron chieftain asserted. Micron's own ratio of sales to the spot market has increased from 10% in March to 20% in May, he said. The sudden dropoff in flash memory sales to the communications and networking market has caused Micron to reverse its previous gradual increased share of wafer starts for flash chips. Mike Sadler, vice president of marketing, said Micron is now shifting back to a greater ratio of wafer starts coming to DRAMs. However, he said SRAM sales to the communications market held up in the quarter ended May 27 "surprisingly well." He also said Micron has had no slowdown in memory chip sales to OEMs making set-top boxes. Micron told analysts that in April the firm held a 25.7% share of the global DRAM market, but this had slipped from a 27.1% share in calendar Q1 of 20'01. Semiconductor analyst Eric Ross at Thomas Weisel Partners in San Francisco said he believed the second half seasonal pickup in PC sales could benefit Micron. "The DRAM inventories have been normalized at PC OEMs, so any upturn in demand would show up quickly as increased orders for DRAMs," he said. "This would move Micron revenues and margins up in the second half." The company's aggregate work in process and finished goods inventories, as measured in megabits, were considerably higher at the end of the third quarter, principally due to the acquisition of theKMT wafer fab. At May 31, 2001, the company had cash and liquid investment balances in excess of $1.7 billion. Micron said expects capital spending for its fiscal year, ending Aug. 30, to be $1.8 billion as the company continues to invest in leading-edge manufacturing and process capabilities.