Good morning Clint,
>Harry, you need to get yourself a Sally .....
>Happy Dating!
Relationships can be interesting at times can't they.
We will have to trade stories some day.
Here is a another site for telecommunications news.
totaltele.com
At the end of this message is a story about the slow recovery
of the semiconductor industry. We have already seen hints
of this already in some of the forward guidance from companies
such as AMAT.
Harry
**************************************
Sunday June 7, 4:42 pm Eastern Time
Worldwide semiconductor slump to last another year
By Kourosh Karimkhany
PALO ALTO, Calif., June 7 (Reuters) - The two-year-old worldwide semiconductor slump may
drag on due to the Asian financial crisis, lackluster personal computer demand and a worldwide
glut
of memory chips, industry analysts say.
It now appears that the $140 billion worldwide semiconductor industry will not return to its
historical
annual growth rate of 17 percent for at least another 18 months, experts said.
''It's going to be 1999 or 2000,'' said Mark Edelstone, analyst at investment bank Morgan
Stanley
Dean Witter (MWD - news). ''It's not going to be this year.''
Some market researcher firms had expected modest growth in 1998 and a big jump in 1999.
Those
forecasts have been trimmed in recent weeks.
Last week, the Semiconductor Industry Association said it expected global sales of computer
chips
to drop 1.8 percent to $134.6 billion in 1998, largely because of Asia's economic woes.
As if to prove the point, the day after the chip forecast came out, Motorola Inc. said it might report
a
loss in the second quarter because of disastrous chip sales and will lay off up to 15,000 workers
in
an attempt to cut costs.
Other semiconductor companies also have had sobering news in recent weeks. Intel Corp., the
world's biggest chip maker, has said it does not expect revenue to increase this year and that it
plans
to eliminate up to 3,000 jobs.
National Semiconductor Corp plans to lay off 1,400 people. Applied Materials Inc., the biggest
equipment supplier to the industry, is offering voluntary severance packages.
Still, some executives say the industry could recover quickly because of the world's ravenous
demand for electronics.
''It's not that bad,'' compared with previous downturns, said George Scalise, president of the
Semiconductor Industry Association in San Jose, Calif.
Consider what happened last time. Worldwide chip sales plunged 35 percent in 1985 during a
vicious international price war and a dropoff in PC demand.
This time around, demand remains relatively healthy. Unit shipments of all types of computer
chips
are up substantially. The trouble is, overcapacity and falling Asian currencies are forcing
semiconductor producers to slash prices.
Memory chip sales, for example, totaled $40 billion two years ago. Even though the number of
memory chips has increased since then on rising computer sales, revenue has collapsed to $20
billion, said Dan Carracino, a partner at American IC Exchange, a commodities firm that trades
semiconductors.
''The contract price of a 16-megabyte DRAM (a common memory chip) was $50 in 1995,'' he
said. ''It's now in the $2 range.''
Even though some companies have been mothballing chip factories, chip production is
increasing
because of more efficient manufacturing, Carracino said.
And American companies have to compete against Asian producers like Korea's Samsung
Electronics. As Asian currencies collapse, Asian products become less expensive on world
markets
without hurting their companies' profits.
''The memory chip market has gotten even worse than what even the most pessimistic people
thought,'' said Nathan Brookwood, an analyst at industry researcher Dataquest.
Then there is trouble at companies like Intel and Motorola. Both misjudged the speed of
technological advance.
Intel, for example, underestimated the power of its own microprocessors. Even its low-end chips,
which appear in PCs that cost $1,000 or less, are powerful enough to run all but the most
sophisticated software. It cannot sell enough of its high-end chips to keep its profit margins fat.
And Motorola, which makes most of its money from wireless phones, pagers and
telecommunication
infrastructure, misjudged the popularity of a new generation of digital cellular phones and the
back-office equipment that makes them work. Now it is stuck with unused inventories of chips for
its older products.
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