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To: Chas who wrote (32393)	4/22/1998 11:41:00 PM
From: DJBEINO	Respond to of 53903

NEC (6701), Hitachi To Mass-Produce System Chips In FY98 TOKYO (Nikkei)-NEC Corp. and Hitachi Ltd. (6501) will begin mass production of system chips in fiscal 1998, ahead of foreign rivals, the companies revealed Wednesday. NEC will invest 300 billion yen and Hitachi 100 billion yen to start production. The move marks a reversal of an earlier industry strategy of producing mainly DRAM (dynamic random-access memory) chips. Other Japanese semiconductor makers such as Toshiba Corp. (6502) are likely to follow suit. The industry shift may also ignite demand from makers of chip-based equipment, digital TV sets and personal digital assistants, helping to boost private-sector capital investment, business sources said. NEC will target output of 2 million system chips a month at its two domestic plants from early next year. The company expects production to exceed 10 million units after 2000, when demand is predicted to pick up. Hitachi will begin production late this year. Japanese chip makers have been rapidly losing ground in the DRAM market due to heated competition with South Korean and Taiwanese manufacturers. With the exception of NEC and Toshiba, most companies seem to have posted losses in the year ended March. NEC and Hitachi see system chips as more profitable than DRAMs because of the companies' technological advantages over foreign competitors, industry analysts said.