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To: Laptev who wrote (11316)	12/3/1997 9:03:00 AM
From: Brad Rogers	Read Replies (1) \| Respond to of 45548

Tuesday December 2, 6:15 pm Eastern Time INTERVIEW - TI plays down chip industry concerns By Kieran Murray DALLAS, Dec 2 (Reuters) - Texas Instruments Inc. [NYSE:TXN - news] said Tuesday it expects the global chip market to show improved growth in 1998 and downplayed concerns over prices for memory chips and end market demand. Vladi Catto, TI's chief economist, said the economic crisis in Asia would help the semiconductor industry in 1998 because South Korean producers will be forced to cut back their plans for capacity expansion. But he said memory chip prices would likely remain under pressure over the next three months before improving. ''My contention is that in the very short run -- by that I probably mean the next two or three months -- we may continue to see downward pressure on memory prices,'' he said. ''But in the intermediate run, which is six to 12 months from now, we are going to see the impact of cutbacks in capacity on the part of Korea and also Japan and Taiwan, all of which is going to benefit the industry.'' Texas Instruments' shares fell about 9 percent on Tuesday after Merrill Lynch cut its earnings estimates for the company, citing slower order rates, excess capacity and a deceleration of demand in the chip industry's end markets. Catto declined to comment on TI's order rates, saying he did not have detailed information at hand, but he expects the industry to do better in 1998 than this year. ''All in all, I think that, as we look at the semiconductor market, we still see growth for the semiconductor market in 1998 stronger than it is in 1997,'' he told Reuters. TI executives said in October that they expected the global chip market to grow 15 percent or more next year, compared with about 10 percent this year. Catto saw no evidence of slowing demand in end markets such as personal computers, wireless and networking. ''I don't see a deceleration in the growth of the end markets,'' he said. The U.S. economy should remain strong in 1998 with European economies doing better than in 1997 and the Asia- Pacific region also growing because of rapid growth in China and because Japan would also do better than in 1997. ''With the economies in 1998 stronger than they were in 1997, we see the (global) end equipment markets in 1998 at least as strong as they were in 1997,'' Catto said. There was some ''misunderstanding'' by investors about the impact of Asia's economic crisis on the semiconductor industry. ''It seems to me the financial markets are interpreting the current situation exactly the wrong way,'' Catto said. South Korean producers -- led by chip industry heavyweight Samsung -- would be forced to cut back investment plans because the country's economic woes were hurting their ability to raise money for expansion. ''The end result of all of this will be heavy cutbacks in Korea's capital spending plans, which in turn will benefit companies like TI simply because they will bring about an equilibrium between demand and supply quicker than anticipated,'' he said. Global oversupply in the last two years has battered the prices of common memory chips, which account for 15-20 percent of TI's revenues. Catto said the weakness of South Korea's national currency would likely put more pressure on memory chip prices in the near-term, but said it would be a, ''very temporary phenomoenon to be quickly reversed by cutbacks in capacity additions by Korean companies.''