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

To: StanX Long who wrote (63532)	5/7/2002 11:51:31 PM
From: StanX Long	Respond to of 70976

Where's The Chip Recovery? Arik Hesseldahl, 05.07.02, 5:10 PM ET forbes.com NEW YORK - Just when we thought encouraging first-quarter numbers had signaled the end of the semiconductor slump, the industry has to cross at least one more bridge before a long-awaited recovery can be considered fully underway. Hopes had been high that the worst stretch in the chip industry's history was over, as the Philadelphia Semiconductor Index surged 85% in March from its late-September low. But the index has fallen by more than 25% since March. The first quarter of 2002 proved to be atypically strong, as global chip sales rose 6% after a year of nothing but declines. But that increase was largely artificial, fueled by the up-one-day, down-the-next prices in the computer memory business, says Brian Matas, an analyst with market research firm IC Insights. "Take away the gains in the memory business, and what you would have had is a 1% percent decline for the industry overall," Matas says. Average selling prices for memory chips grew by 111% sequentially in the first quarter, while sales grew by 82%. At least part of those gains came from price increases that resulted from expectations that the number of large memory producers was going to shrink. Micron Technology (nyse: MU - news - people ), it seemed all but certain, would close its deal to acquire the memory chip business of beleaguered South Korean chipmaker Hynix Semiconductor. Now that the Micron-Hynix deal has fallen apart, prices for memory chips will likely renew their spiral downward.