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To: shane forbes who wrote (8201)	12/7/1997 2:47:00 PM
From: Haim R. Branisteanu	Respond to of 25814

Shane, I worked in the past for MOT so maybe I am a little biased. By being familiar with many of MOT chips and their history of integrating older chip generations into new ones, I bet on MOT success. Furthermore, MOT recent move, points to a market trend, after others made it in a succesfull way, which IMHO will squize the smaller manufacturers such as LSI and VLSI. It will not come overnight but those companies just have another powerfull competitor to deal with in a quite squized market. Motorola hopes a system-chip strategy will prove as potent as it has for rival SGS-Thomson Microelectronics. By focusing on customized designs, the French-Italian chipmaker's revenues jumped 16% last year, despite a 9% dip in the world market. ''The first critical success factor'' in system chips is a wide range of technologies, says Jean-Philippe Dauvin, a vice-president at SGS-Thomson. and not to mention Toshiba, Hitachi, NEC, Siemens and Philips or others eying this market. The semi industry looks more like the automotive industry before the great mergers. BWDIK Haim

To: shane forbes who wrote (8201)	12/8/1997 5:38:00 PM
From: Moonray	Read Replies (1) \| Respond to of 25814

Analysts Debate Over Health Of Chip Market (12/08/97; 12:00 p.m. EST) By Crista Souza, Electronic Buyers' News While analysts debate the long-term implications, worries about a new weakness in semiconductor demand is giving some chip suppliers a short-term case of heartburn. The latest scare comes from Altera, which warned earlier this week that it expects its fourth quarter sales and earnings to roughly equal those of the third quarter, rather than the 5 percent profit increase it had earlier forecast. Analyst Thomas Kurlak of Merrill Lynch & Co., in New York, said the semiconductor industry is in the throes of a major market correction -- the kind that can take several years to resolve itself. "It's a slowdown that started in August and has been gaining momentum," Kurlak said. "We're concerned it will get worse before it gets better." Others were more upbeat, saying the industry next year will see slight recovery, if not a return to more normal growth patterns. "Growth is still positive," said Charles Boucher, an analyst at UBS Securities Equity Research, in San Francisco. "It's just at a lower rate." For the immediate term, San Jose, Calif.-based Altera said orders slowed sharply in November because of push-outs from certain customers in the computing and communications segments. And weakness in the Asia-Pacific market has created uncertainty about December orders, according to chief financial officer Nathan Sarkisian. LSI Logic, in Milpitas, Calif., also said it expects the fourth quarter will be flat, if not slightly down from last quarter. Earnings are expected to be lower by about 10 cents per share. "Inventory is being managed very tightly," an LSI Logic spokesman said. "Lead times are very short, and we don't see that abating at all." Kurlak, Boucher, and others said it is a combination of abundant capacity, excess inventory, and weak end markets, especially in the data networking and telecommunications segments, that is leading OEMs to revise their ordering schedules. But this corrective phase may just be a relapse of the 1996 inventory correction, from which the market never fully recovered, Boucher said. "I don't think the industry ever really took its medicine" by adjusting capital spending, he said. It will take at least another quarter to determine what effect, if any, the economic woes in Asia will have on the global semiconductor market, Boucher said. But it will take most or all of 1998 to get inventories squared away. And even as orders for semiconductors are slowing, chip manufacturers continue to build new factory capacity. A revised 1998 outlook from Semiconductor Equipment and Materials International indicates a global increase of 11.6 percent in capital equipment spending. Whether that will have a deleterious effect on the already sluggish chip market is not certain. Dan Hutcheson, a principal with VLSI Research, in San Jose, Calif., doesn't think it will. "There is not really excess capacity. Everyone's running at capacity right now," Hutcheson said. "I don't see things being tough next year." The wild card in all this appears to be how the financial turmoil in Asia will affect the global semiconductor market. The Semiconductor Industry Association projects that the region will represent 22 percent of total semiconductor revenue this year. "The world is freezing up because they fear what is happening with Korea and the whole financial crisis in Asia," Hutcheson said. "But most of the end demand comes from Europe and the United States, where the economies are pretty healthy." o~~~ O