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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (22510)	3/29/2005 4:40:25 PM
From: Donald Wennerstrom	Read Replies (2) \| Respond to of 95757

29 Mar 04:26 By Yun-Hee Kim Of DOW JONES NEWSWIRES <<SEOUL (Dow Jones)--Prices of computer memory chips have fallen sharply since the beginning of this year - and are nearing cost levels for many chip makers - but an executive at Micron Technology Inc. (MU) said there are signs of a pickup in demand. "We're starting to see some pretty aggressive box loading by PC customers from a memory standpoint," Michael Sadler, vice president of worldwide sales at the world's third-largest memory chip maker, said in an interview with Dow Jones Newswires Tuesday. Personal-computer manufacturers "are feeling more comfortable with lower memory pricing to put more memory in their systems and that typically results in pretty strong demand going forward." Prices of dynamic random access memory, or DRAM, chips - the core memory component most widely used in PCs - have fallen nearly 40% since the beginning of the year. The average spot price of the most widely used DRAM, 256-megabit double data rate chips that run at 400 megahertz, or DDR-400, were fetching $2.44 early Tuesday, down sharply from $4.04 at the beginning of this year, according to DRAMeXchange, an online clearinghouse for chips. Sadler said Micron's current DRAM inventory stands at two-to-four weeks of supply. "We feel good about the demand situation and are quite comfortable with demand being sufficient to absorb our supply," he said. Despite a sharp decline in prices of double data rate DRAM chips primarily used for computing products, Sadler said prices for synchronous DRAM as well as chips used in mobile phones have been stable, limiting the damage to earnings. "We think that the product diversification strategy that wehave in place - and NAND flash is a part of that - on an intermediate to a long term basis is going to make us more profitable," said Sadler. Micron is one of many DRAM companies nowadays moving into production of NAND flash chips, dubbed "nonvolatile" for their ability to retain data even when they lack a constant supply of power. The term NAND is derived from the phrase "not and," and refers to one of the two main types of flash memory currently in wide use. Companies such as Samsung Electronics Co. (005930.SE) and Toshiba Corp. (6502.TO) are the leaders in NAND chips, which are found in the removable storage cards used with digital cameras and MP3 music players. Sadler said while demand for NAND flash currently exceeds supply, he expects supply to be "equal to or greater than demand" for this year and probably next year. While the production of NAND flash at Micron is currently "insignificant," Sadler said by the end of this year Micron expects production of NAND flash to represent about 5% to 10% of its total revenue. Sadler said he expects global NAND flash bit growth - a measure of volume growth - of more than 100% this year, compared with 45% to 55% bit growth for DRAMs. "It's a huge market," said Sadler. "It's got the growth characteristics at least for the next couple of years that the DRAM market doesn't have, so it's attractive from that standpoint." Given the aggressive output from rivals, Sadler said that prices for NAND flash will likely fall this year "in line with what we are expecting in the DRAM area...33% to 34%." Despite Micron's push into the profitable NAND flash market, he said the Boise, Idaho, chip maker won't be sacrificing its DRAM output. "If you look at the course of the next several quarters, we will be increasing DRAM output at a more moderate rate due to our ability to ramp production of NAND flash and CMOS image sensors," he said. CMOS image sensors are used in devices such as digital cameras. Analysts say as more and more DRAM makers bolster production of flash memory and other types of chips, the move should help alleviate an oversupply of DRAMs in the market. "DRAM prices are expected to rebound during the second quarter as more and more DRAM fabs would be reallocated to non-DRAM, resulting in slower DRAM bit growth," said Nam Hyung Kim, an analyst at U.S. market researcher iSuppli Corp. DRAM makers "almost have to be in the NAND flash business in order to generate the leverage on the R&D and capital dollars," Sadler said. Sadler's comments came as Micron is slated later Tuesday to release its results for the fiscal second quarter ended Mar. 3. Sadler declined to comment specifically on the results, only to say that he expects Micron's diversified product portfolio of memory chips to help boost future profitability. Analysts expect Micron to post earnings of 15 cents a share in the just-ended quarter, according to the mean estimate of a survey of 23 analysts by Thomson Financial. In the year-earlier quarter, Micron posted a net loss of $28 million, or 4 cents a share, on sales of $991 million.