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To: SMALL FRY who wrote (9281)	1/30/1998 10:58:00 PM
From: Mang Cheng	Read Replies (2) \| Respond to of 25814

"Despite recent gains, semiconductor stocks are expected to suffer " "But don't be fooled. These semiconductor stocks are still in for a rough ride. Indeed, the near-term outlook for the group took on a bleaker tone Thursday when Merrill Lynch analysts once again adjusted down their expectations for the stocks. In a conference call with brokers and money managers, Merrill Lynch analysts Tom Kurlak and Robert Stern notched down their expectations for the sector's performance in 1998. Kurlak, who covers semiconductors for Merrill Lynch, says weak demand and overcapacity mean things are going to get worse for the sector before they get better. He says the group will test new lows sometime soon, after having recovered somewhat from the last selloff that peaked in December. "The semiconductor makers are grudgingly accepting the fact that there is a slowdown," says Kurlak. "And they are holding out for recovery in the second half. But we are doubtful about that because of a worldwide slowdown this year." Part of the problem is a slowdown in demand for the products that use chips and, Kurlak cautioned, little reduction in capacity going on. What's more, he said, many of the big Korean chip makers plan to aggressively exploit the weakened Korean currency to increase their global sales. Stern, who covers the companies that make equipment used to produce chips, says he now expects growth of only 0% to 5% for the year, down from his previous forecast of 5% to 10%. U.S. companies like Texas Instruments (NYSE: TXN) and Motorola (NYSE: MOT) plan to spend more on chip equipment. But that will be more than offset by a slowdown in spending by Asian companies. pathfinder.com Mang