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To: John Graybill who wrote (32327)	4/22/1998 11:32:00 AM
From: DJBEINO	Respond to of 53903

04-23-98 Korean Chipmakers Face Trouble Cutting Output to Recover Prices The semiconductor industry is mired in a controversy arising from the issue of cutting down the production of 64 megabyte DRAM chips to prevent the steady skid in its price, industry sources said yesterday. The nation's three major chipmakers and five Japanese chipmakers cannot appear to come to an agreement to reduce the production to avoid the supply glut, the sources said. The Japanese chipmakers have decided to keep their plants rolling even during the ''golden week'' vacation period in May that includes May Day, and the Children's Day, when the entire Japan is off on holidays during the period. A number of Korean chipmakers, seeing that the Japanese chip firms deciding to forgo vacation, have scrapped their suspension schedules. On the other hand, such large chipmakers as Samsung Electronics, NEC and other top-class chipmakers in the world, have been saying all along that the industry would have to shut down some of the plants to recover the prices of these chips like they did to prevent the drop in the price of 16 megabyte DRAM chips not long ago. The sources said that these global semiconductor makers have been able to recover the fallen price of these chips in the first half of last year since they switched off some of their plants when its price started to fall from the end of 1996 due to oversupply. But other chipmakers such as Hyundai Electronics, LG Semicon and some other Japanese firms are worried that other late starters like those in Taiwan would cause more excess production with further investment in chip production facilities. They said reduced production halted further skids in the price of 16 megabyte DRAM chips for a while, but they went crashing down further as other chipmakers from the United States and taiwan expanded their production in the second half. The chipmakers in the top tier group have completed their production facility investment, but those in the second tier are at a point where they have to continue to expand investment in production facilities, because suspension means they would have to suspend their investment in the middle of it, creating more troubles for them. An executive of a second-tier firm said the only way to resolve the problem is a die-hard competition among the makers.