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To: Frederick Langford who wrote (72872)	9/12/2002 7:41:02 AM
From: 2MAR$	Read Replies (1) \| Respond to of 208838

Morning Fred ---> European chip stocks tumble after fresh wave of warnings By Lucas van Grinsven AMSTERDAM, Sept 12 (Reuters) - Semiconductor stocks were hit hard on Thursday after chip makers around the world said weak demand was forcing them to cut earlier sales forecasts and production targets. Philips <PHG.AS> in the Netherlands said it expects a third-quarter sequential revenue decline of 13 to 15 percent at its chip unit, while it earlier had factored in a zero to five percent decline. The stock fell nearly 10 percent and traded down 8.4 percent at 17.97 euros by 1105 GMT. Philips is not a pure play chip maker because it also has large consumer electronics and medical equipment divisions. "But top line estimates and earnings clearly need to come down for Philips," said a specialist salesman at ABN AMRO Bank. Meanwhile in Taiwan, Taiwan Semiconductor Manufacturing Co <2330.TW>, the world's largest contract chip maker which is part-owned by Philips, said it would cut in half the output of its most advanced chips made on 300 millimetre silicon wafers. As a result it would delay installing new equipment and machinery for these by three to six months, which hurt its main supplier ASML <ASML.AS>. ASML shares fell 8.3 percent. In South Korea, chances of survival looked better for troubled memory chip maker Hynix <00660.KS> after local media reported its creditors were prepared to slash its debt -- the shares rose by the daily limit of 15 percent. But good news for Hynix is bad news for its healthier rivals in the memory chip market which fear Hynix may dump its products and put further pressure on already low selling prices. Shares in Infineon <IFXGn.DE>, Europe's only manufacturer of DRAM memory chips used in all personal computers, fell almost seven percent to 9.50 euros. The FTSE European semiconductor index <.FTTXSC> dropped 5.6 percent at 192.20 points, erasing a hesitant recovery from earlier this week. The DJ Stoxx index of European technology stocks <.SX8P> fell 3.5 percent. "This is a reaction to Philips," said an analyst at a major bank in London. DOUBTS ABOUT REBOUND Philips said it expects a sales rebound in the fourth quarter, partly because sales in the fourth quarter are always higher than the third, and also because certain customers were getting more interested in some of its products. But investors, whose battered nerves had been calmed down by last week's mid-quarter updates from cellphone behemoth Nokia <NOK1V.HE> and chip giant Intel <INTC.O>, were sceptical about any chances for marked recovery. "I think this will be a continuing theme for the rest of the year: ongoing downgrades and warnings from companies. There's a clear slowdown which is obviously disappointing," said fund manager Simon Kirton at Aberdeen Asset Managment in London. European chip stocks have fallen 55 percent this year, underperfoming the FTSE Eurotop 300 index <.FTEU3> which has lost 26 percent. The U.S.-listed Philadelphia Semiconductor Index <.SOXX> and a key barometer for the sector last week hit a new four-year low of 275 points. It has lost 80 percent since it peaked at 1,362 points in March 2000. Analysts said in the negative environment, news that the European Patent Office in Munich on Wednesday had affirmed the novelty and inventiveness of Rambus Inc.'s synchronous DRAM (dynamic random access memory) patent could be adding to the downside. Infineon declined to comment on the case. The chip maker said it is involved in three law suits in the United States and Europe regarding Rambus' claim to intellectual property rights used in Infineon's memory chip technology. (Additional reporting by Alison Tudor in London, Sarah Knight in Frankfurt and Patrick McLoughlin in Stockholm) ((European Equities Desk, +31 20 504 5019 lucas.grinsven@reuters.com)) MORE * end of story *