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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Paul V. who wrote (14875)	1/20/1998 2:51:00 AM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

Hitachi, Fujitsu Signal Cuts In Spending on Chip Production Dow Jones Newswires January 19, 1998 TOKYO -- Weakness in the global semiconductor market was underscored Monday when two Japanese electronics giants, Hitachi Ltd. and Fujitsu Ltd., signaled retrenchments and production cuts. Hitachi, according to a report in the Japanese business newspaper Nihon Keizai Shimbun, will slice monthly chip output by more than 20% in February and March by suspending operations at its eight domestic factories. Fujitsu Ltd. indicated that it's considering a cut of as much as 40% in capital expenditures on its semiconductor business in the fiscal year starting April 1. Meanwhile, Mitsubishi Electric Corp. will withdraw from microchip production in the U.S. and close television plants in the U.S. and Singapore, company sources said. The action is part of a plan to sharply cut back on its overseas operations. Hitachi's factories will stop making semiconductors such as 16-megabit dynamic random-access memory chips, or DRAMs, and static random-access memory chips, or SRAMs, for an average of eight to 14 days a month in February and March, the company said. The company plans to cut DRAM output at the end of March to about eight million chips a month from the nine million originally targeted, and is also considering halting such production by year-end. Overseas chip factories won't be affected since most operate as joint ventures with other companies. The suspension of operations at Hitachi's factories in Japan will be the first time regular factory operations are halted since spring 1992, when production was stopped at two domestic plants. The production cut is being made in an effort to revamp the company's deficit-ridden microchip division. Sales of memory chips account for 34% of the semiconductor division's total sales, the highest ratio among Japan's five major electronics companies. A slump in the volatile microchip market has therefore hit the company's earnings particularly hard. The cut in production is expected to lower projected sales by more than 12%, meaning the chip division will most likely remain in the red in the year ending in March for the second consecutive year. Meanwhile, a spokeswoman for Fujitsu linked the global glut in DRAM chips to the company's projected reduction in spending on chip-making infrastructure. In the current fiscal year, Fujitsu plans to spend 180 billion yen ($1.39 billion) on semiconductor production. At Mitsubishi, the planned withdrawal from chip production in the U.S. is designed to help revamp the company's increasingly unprofitable semiconductor and consumer-electronics businesses. Mitsubishi will be the first Japanese manufacturer to withdraw from chip-making operations overseas. The cost of the restructuring, coupled with falling chip prices, is expected to expand consolidated net losses for the year through this March to about 40 billion yen to 50 billion yen ($310 million to $388 million), compared with an earlier projection of 10 billion yen. Mitsubishi will close a chip-fabrication factory in North Carolina by the end of March, laying off 180 workers. The plant has been turning out four-megabyte dynamic random-access memory chips since 1990. The company hopes to reduce losses by either selling the plant's chip-making equipment to U.S. companies or using it in Japan.