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To: gerard mangiardi who wrote (39297)	3/16/1998 8:32:00 AM
From: Glenn D. Rudolph	Respond to of 61433

INTERVIEW-Acer chief Shih sees future in software Reuters Story - March 16, 1998 03:26 %TW %US %EMRG %LEI %PUB %CN %HK %ELI %ELC %DPR %FCAST 2306.TW 1132.HK INTC CPQ TXN 2804.TW 2824.TW %SG ACER.SI V%REUTER P%RTR By Lawrence Chung TAIPEI, March 16 (Reuters) - Acer Inc chairman Stan Shih on Monday gave a glimpse of his strategic outlook for Taiwan's top computer brand, focusing strongly on software while remaining cautiously optimistic about hardware. Shih, in an interview after forming an entertainment joint venture with Hong Kong movie group Golden Harvest Entertainment Holdings Ltd , said gloomy recent profit forecasts by U.S. computer leaders Intel Corp and Compaq Computer Corp were good news for Taiwan's computer makers. "This is something we've expected for years," Shih said of a U.S. computer industry shift to lower-priced personal computers that Intel has warned would hurt its first-quarter profits. Shih said Intel's production actually would rise as more people buy cheaper computers, but its profit margins would shrink. Profits would rise at firms that make low-cost PCs. "All this means is that Intel's profits now will shift into other people's hands," Shih said. "This is good for Taiwan." Shih gave only a guarded assessment of the outlook for Acer Semiconductor Manufacturing Inc, which had been called TI-Acer until Acer bought out a 33.34 percent stake held by U.S. giant Texas Instruments in early March. Venture capital firm China Development Corp holds 14.29 percent and Chiao Tung Bank 3.62 percent . With Acer now controlling 82 percent of the chip venture, Shih said the troubled maker of dynamic random-access memory or DRAM chips now had a far better chance of survival. "This buyout was no quick decision," Shih said. "The most important thing is to be able to operate independently. Otherwise it (Acer Semiconductor) could not survive." Shih indicated the TI-Acer buyout enabled Acer to consider a shift away from the battered DRAM market, where prices have cascaded in the past two years -- hammering most manufacturers. "We will adjust production according to market demand. It won't necessarily be DRAM," Shih said. Texas Instruments will continue to transfer its latest DRAM technology to the company and has committed to purchasing all the DRAM that it produces for one year. Shih was circumspect about the outlook for DRAM. "We hope for a good DRAM outlook," he said. Though Acer -- with its stylish Aspire line -- is Taiwan's first global computer brand and the company ranks eighth in world PC production, Shih said this may change as Acer shifts its focus conspicuously toward software. "Give us 10 more years for hardware development. But these days not going into software just won't work," he said. "Acer should be a possessor of intellectual property -- that is, of software," he said. "What makes the U.S. firms so competitive is their ownership of intellectual property." Products will include computer games with tie-ins to major movie releases and technological enhancements to Golden Harvest's entertainment ticketing systems, Shih said. Shih declined to take questions about the finances of Acer or its major subsidiaries, including Acer International Computer Ltd in Singapore, which on Friday reported a 27 percent annual decline in profits for 1997.