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Strategies & Market Trends : Guidance II -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (522)	3/13/2002 7:31:42 AM
From: DebtBomb	Respond to of 2077

Seoul, March 12 (Bloomberg)- NEC, Trigem & other PC makers say a rally in chip prices may end because it was driven by their marketing strategy of boosting PC power, not a pickup in PC sales Prices of DRAM rose as much as 89% this year as PC makers almost doubled the main memory of each PC, even though few programs require such power. PC makers say the rise in chip prices may stop them from adding more memory & that sales may slow next quarter ``Rather than consumer demand, it's the fact that PC makers have been putting 2x as much memory in each PC'' that has pushed chip prices up, said Kwon Youn Hak, finance team official at Trigem, largest PC maker by capacity The rebound in prices has helped fuel a rally in chip maker stocks this year, with Samsung, the world's biggest producer, surging 24%. Investors are also watching chip prices as Samsung's nearest rival Micron tries to expand by buying assets from the #3 Hynix PC sales fell for the 1st time since the industry was created last year, forcing DRAM makers to sell semis for less than they cost to produce. DRAM sales shrank by 2/3s to $11 billion Slow Recovery This year's recovery in PC demand may take time. Intel, largest maker of processors, last week told investors it expects PC sales to fall Q2 Worldwide sales of PCs will slow to 29.4 million units, according to Gartner, down from 30.5 million in Q1. That may cause Trigem & its rivals to cut orders of chips The spot market price of the benchmark 128-megabit DRAM chip rose to $4.48 each yesterday. At the beginning of the year it was about $2.50, more than $1 below the level at which analysts forecast companies make money selling the chips ``DRAM prices will face pressure in Q2 as demand for PCs slows due to seasonal factors,'' said Tim Li, CFO of Quanta, Taiwan's biggest notebook computer maker The DRAM price has already accounted for the increased memory demands of PCs using a new operating system from Microsoft, Window's XP, analysts said ``We've shot up so quickly -- we are close to 230 megs per box on average -- it's hard to see memory per box going beyond 256 megs,'' said Jonathan Ross, head of tech research at Goldman Sachs-Asia Production Cuts Few analysts expect DRAM prices to plunge. Last year, some companies cut production & all are slashing spending on new facilities, helping ensure that supply won't exceed demand by too much ``The bottom is not going to fall out of chip prices, but there is no incremental demand for PCs,'' said Keon Han, analyst at Bear Stearns-Asia. Han said he expects a ``correction'' in the price of chips & shares of chipmakers in the Q2 Even so, this year's rebound in prices may encourage manufacturers to once again ramp up output into a market where demand may be insufficient ``If people get more bullish & increase supply, while we haven't seen any evidence to suggest the PC will become a hot item again, there will be a correction,'' said Hwang Seong Min, analyst at ABN Amro Securities in Seoul, who forecast that increases in the amount of memory used per system will not increase further in the short-term Hynix Hynix said this week that it will spend 1.3 trillion won ($992 million) this year on improving its production, up from 300 billion won last year. This will raise its output of chips by over 60% this year, the company said And Samsung, Micron & others ``are not going to stand still,'' said ABN's Hwang. This may come as PC-chip demand is following a normal pattern for this time of year & an economic recovery hasn't started yet, according to Andy Bryant, CFO-Intel ``Demand is just not there yet,'' said Toshinori Arai, spokesman at NEC, Japan's biggest PC maker. ``January & February sales are lower than the same period last year.''