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To: Paul Engel who wrote (158858)	2/14/2002 11:00:27 PM
From: Paul Engel	Respond to of 186894

Bad News for Hitachi - Good NEWS for Intel, AMD and Micron Hitachi to Retreat From Mobile-Phone Memory Chips quote.bloomberg.com 02/14 20:30 Hitachi to Retreat From Mobile-Phone Memory Chips (Update1) By Yoshifumi Takemoto and Ian Messer Tokyo, Feb. 15 (Bloomberg) -- Hitachi Ltd., which expects a loss of 230 billion yen ($1.7 billion) this fiscal year, will withdraw from the mobile-phone memory-chip market over the next 2 years to avoid competition with U.S.-based Micron Technology Inc. Japan's third-largest chipmaker will phase out the production of flash-memory chips and static random-access memory chips, Hideo Inayoshi, a senior manager at Hitachi's chip business, said in an interview. Hitachi will focus on system LSI chips and microprocessors for consumer appliances and cars. ``This is a step in the right direction for Hitachi,'' said Sadaharu Nagumo, who helps manage 20 billion yen in assets, including Hitachi shares, at Japan Investment Trust Management Co. ``They have a mountain of businesses and they're right to exit some and narrow their focus.'' Tokyo-based Hitachi expects a loss of 127 billion yen at its semiconductor business in the twelve months to March 31. The company is retreating from the memory-chip business, farming out production of dynamic random-access memory chips to a joint venture with NEC Corp., Japan's second-largest chipmaker. Mobile- phone memory chips are also unprofitable. ``Even if demand recovers, we can't compete with giants like Micron Technology, which is said to be launching production of flash memory soon,'' Inayoshi said. Boise, Idaho-based Micron Technology is the second-biggest maker of computer-memory chips. Hitachi's shares rose as much as 9 yen, or 1.1 percent, to 838. They've declined about 14 percent since Jan. 1, compared with a 2 percent drop for rival Toshiba Corp., Japan's biggest chipmaker. Non-memory Chips Hitachi's chips division will focus on non-memory chips such as wireless communications chips for Nokia Oyj's mobile phones and microprocessors for Nissan Motor Co. engines, Inayoshi said. The company will shift engineers involved in flash memory and SRAM chips to the development of microprocessors, Inayoshi said. Microprocessors are used to calculate and process data. Chips account for about 6 percent of Hitachi's sales. For the full year, Hitachi expects mobile-phone memory chips to account for one-eighth of its loss on an operating basis. ``The share of memory chips in relation to total chip sales will be less than 10 percent in the twelve months to March 2004, down from an estimated share this fiscal year of 20 percent,'' Inayoshi said. Half of all SRAM chips produced by Hitachi are used in the company's own mobile phones. The company's bid to make inroads in Japan's handset market has stumbled because it failed to tie up with NTT DoCoMo Inc., Japan's No. 1 cell-phone operator. Hitachi supplies most of its phones to KDDI Corp., Japan's second-biggest mobile-phone operator. KDDI is losing market share to rivals DoCoMo and Vodafone Group Plc's J-Phone Ltd. DRAM chips act as the main memory in personal computers. Flash memory and SRAM are used in mobile phones to retain data. Flash-memory chips, which are typically used in digital cameras, hand-held computers and portable music players, retain data even when power is turned off.