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To: MileHigh who wrote (4551)	6/11/1998 5:02:00 PM
From: MileHigh	Read Replies (1) \| Respond to of 93625

From briefing.com... SEMICONDUCTOR SECTOR. Given the various warnings that have been issued by various chip and equipment makers, the industry is still reeling from the glut in chips and lack of spending for new fabrication equipment. The disappointment in earnings is likely to last at least two more quarters as the sectors work through their excesses. To be sure, much of the rebound in these two groups is predicated on when Asia does start to improve, although with prices for microprocessors remaining very weak due to the oversupply in the industry, improvements in sales and earnings will be a slow process. While every analyst on Wall Street saw the downturn in Asia having an effect on the chip sector, most analysts underestimated the magnitude of this drop in demand from this region of the globe. For the most part, PC growth was expanding so fast that Asia was viewed to have only a modest impact on the torrid pace of activity. Unfortunately, this proved to be wrong and the tech sector has been issuing earnings warnings ever since. Not too surprising, this morning, Morgan Stanley Dean Witter lowered its 1998 capital equipment spending estimates due to lower-than-expected utilization rates. This sharper decline in spending expectations was probably induced by the fact that last week the Semiconductor Industry Association (SAI) lowered significantly its semiconductor growth projections. In fact, the SAI now expects a decline of 1.8% in 1998 from its previous forecast for an increase of 16%. Thus, it is not much of a surprise that so many chip companies have warned so early in the quarter, instead of waiting until the end of the period. This implies that we could still see more surprises in the next three weeks of June as we're still in the first part of the month. While chip and equipment makers are making drastic adjustments to changing demand conditions, there is no quick fix to the problems that afflicts the sectors.