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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (113)	10/29/2001 8:29:01 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

Asian DRAM makers seek ways to survive bad times TAIPEI (Reuters) - Asian memory chip makers, faced with massive overcapacity as the industry grapples with its worst ever slump, are setting their sights on products with higher margins and more stable demand cycles. ``We need to adjust our product lines and find some niche products. Our DRAM business now accounts for around 30-40 percent of the total sales, down from the 55 percent late last year,'' said a spokesman at Winbond Electronics, one of Taiwan's largest dynamic random access memory (DRAM) chip makers. With hopes for a long sought after industry rebound now pushed back to the second half of 2002 after the September 11 attacks, DRAM manufacturers are also trying to strategically stockpile inventory. The average price of a 128 megabit DRAM, the industry standard, now stands at around $1.1, an 80 percent plunge since the beginning of the year, while it costs $2.5-$3.0 to make. To avoid selling at a loss, Winbond is putting part of its production into inventory to sell when the industry cycle improves, the spokesman said. ``We are also shifting our focus more to the non-PC sector, such as flash memory chips and logistic ICs (integrated circuits),'' which are widely used for game consoles and communications products, the spokesman added. DRAMs are mainly used for PCs. NICHE MARKETS Japanese electronics conglomerate Fujitsu, which axed a further 4,500 jobs this week after falling deep into the red in the first half of its business year, is pulling out of DRAM production and says it aims to focus on computer software and services with steadier profitability. Powerchip Semiconductor, another top player in Taiwan's chipmaking industry, is also moving faster towards the more specialised foundry business. ``Making DRAMs won't make money now. Profits from foundry business could be more stable than DRAM business,'' said a Powerchip official, who declined to be named. Powerchip's foundry operations will account for 70 percent of its total sales by the end of 2002, compared with 15 percent at present, the official said. By then, sales from the DRAM business will be cut to 30 percent from the current 85 percent. While all Taiwan DRAM makers lost money in the first half of 2001, Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest microchip foundry, said on Friday it earned T$0.06 per share in the third quarter of 2001, giving a figure higher than analysts' estimates. Chairman Morris Chang said he expected sales to rise 15 percent in the the fourth quarter from the third quarter, with operating income and net profit more than double in the October-December period. Justine Lin, analyst at MasterLink Investment Advisory, said Taiwan DRAM makers will not have a chance to make a profit until the fourth quarter of 2002. Besides Winbond and Powerchip, Taiwan's other DRAM makers are Mosel Vitelic, Nanya Technologies and ProMOS Technologies CONSOLIDATION The DRAM industry has begun moves towards a much needed consolidation. A Japanese newspaper reported last week that the first big move in the industry would be the world's sixth largest DRAM maker Toshiba Corp selling memory chip operations to fourth-ranked Infineon Technologies of Germany. While Taiwan DRAM manufacturers are very efficient low-cost producers, they depend on foreign technology, which makes them less desirable as a merger or buyout target, say analysts. ``It's a burden. Who will buy a chip company which is losing money especially when we see no improvement in the industry?'' asked Eddy Chen, fund manager at Prudential Securities Investment Trust's T$1.4 billion Exports Fund. Investors have answered that question. Mosel has plunged 78 percent from its year high of T$26.09 in late March and Winbond has fallen 70 percent since its year high of T$38.24 in mid-January. Nanya has lost 77 percent since its high of T$39.45 in late March, all vastly underperforming the 36 fall in the main TAIEX index since its high in mid-February.