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To: TideGlider who wrote (12851)	1/19/1998 9:41:00 PM
From: Shakush	Respond to of 25960

Jap Semicos scale back, from ft.com, no short term good news here ft.com Semiconductors: Japanese chipmakers cut production TUESDAY JANUARY 20 1998 Leading Japanese semiconductor manufacturers are scaling back production and capital spending plans, as a result of the fall in the prices of computer chips and the economic slowdown in Japan. Hitachi, one of the top five Japanese semiconductor makers, said it would cut production at eight of its domestic plants in an attempt to stem losses in its memory chip business. The company plans to shut down production for between four to seven days a week in February and March, cutting output by an estimated 20 per cent. The decision stems from a sharp downturn in the memory market which has resulted in the price of current generation 16-megabit dynamic random access memory chips plunging about 60 per cent since the beginning of last year. Hitachi's move to suspend production is highly unusual in the semiconductorindustry. Manufacturers generally try to keep facilities running as it takes considerable time to restart production. "Their losses are so large that they need to do this," said Yoshiharu Izumi, industry analyst at UBS Securities in Tokyo. Mr Izumi estimates Hitachi is losing Y2bn to Y3bn ($16m-$23m) a month in its semiconductor business. Hitachi's move follows Mitsubishi Electric's plans to close one of its facilities in the US, where it manufactures lower value-added 4-megabit D-Rams. This is believed to be the first closure of an overseas semiconductor factory by a Japanese company. Meanwhile, Fujitsu, another leading semiconductor maker and Japan's largest computer manufacturer, said it was considering scaling back its capital investment plans by about 30 per cent. Although a decision has yet to be announced, Fujitsu conceded that a scale-back was possible. "Supply rose as a number of Taiwanese facilities came on stream and a concentrated (offensive) by Micron, the US company meant that prices of 16-megabit D-Rams have fallen sharply," it said. The weakness of D-Ram prices coincides with a downturn in Japanese PC shipments which has hurt demand for semiconductors. Japanese PC shipments fell nearly 8 per cent in the first half of the year. Toshiba has also postponed the construction of an advanced facility in southern Japan. The original plan was for the new facility to start producing 256-megabit D-Rams in 2000. However, that plan had been delayed by at least two years, Toshiba said. Meanwhile, NEC, the leading Japanese semiconductor maker, and second largest in the world after Intel of the US, is consolidating production of 16-megabit D-Rams at its US facility. "We've got expensive equipment in Japan and Scotland and it's more rational to put them towards producing higher-value-added products," NEC said. As a result, total D-Ram output will fall from about 11m a month to about 6m a month by this autumn. Analysts expect the largest Japanese semiconductor makers to report a second year of losses this year, with the sole exception of NEC. There are also growing expectations that the companies will soon announce scaled back capital spending plans and downward results revisions for the year to March.