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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: zsteve who wrote (22444)	8/3/1998 3:11:00 AM
From: zsteve	Read Replies (1) \| Respond to of 70976

more detailed story about NEC cut Top News Mon, 3 Aug 1998, 2:56am EDT NEC Cuts Microchip Spending 17% This Year to 150 Bln Yen to Stem Losses NEC Cuts Microchip Spending 17% This Year to 150 Billion Yen Tokyo, Aug. 3 (Bloomberg) -- NEC Corp., Japan's largest maker of microchips, said it's cutting capital spending on microchip production in the year through March 1999, to stem losses on its unprofitable computer memory chip business. In a reverse of its strategy of holding microchip spending unchanged, Tokyo-based NEC will cut capital investment 17 percent to 150 billion yen ($1.04 billion), from an initial target for the period of 180 billion yen, said NEC spokesman Makoto Miyakawa. Japan's next four largest makers of microchips -- Toshiba Corp., Hitachi Corp., Fujitsu Ltd. and Mitsubishi Electric Corp. -- were already planning combined spending cuts of more than 21 percent for the year. Tumbling prices for the dynamic random- access memory chips most commonly used in personal computers, caused by global oversupply, mean those companies are all struggling to limit red ink. ''When you consider how bad the industry environment is, it's possible NEC might have to make another downward revision,'' said Naoki Sato, an analyst at HSBC Securities Japan Ltd. ''All the other makers are making cuts of between 20 and 30 percent, yet NEC's cut this time won't even amount to 20 percent.'' Conditions in the DRAM market are ''certainly bad,'' said NEC's Miyakawa. Of more concern to NEC, though, is that the market for more sophisticated and profitable large-scale integrated logic microchips ''isn't good either, particularly in Asia,'' he said. More Delays In response to such harsh business conditions, NEC will delay planned increases in output of 64-megabit DRAM chips -- expected to replace 16-megabit DRAMs as the memory chips in mass production later this year -- and postpone construction of a new production line for logic chips in Yamagata prefecture, north of Tokyo, Miyakawa said. NEC will carry through a planned increase in monthly output of 64-megabit DRAMs from 8 million units at present to 10 million units by year end, yet will delay a further scheduled increase to 15 million units until prices rise again, Miyakawa said. NEC will also continue with its plan to reduce monthly output of 16-megabit DRAMs from 6 million chips at present to 2 million units by year end. The 64-megabit DRAM chips will likely replace 16-megabit DRAMs as the memory chips in mass production later this year as they become cheaper than 16-megabit DRAMs per unit of memory. The decision to delay increases in 64-megabit production means NEC has spare capacity at factories in Kyushu and Hiroshima, southwest of Tokyo, where it could make logic chips instead, Miyakawa said. That allowed NEC to postpone the scheduled operation of a new production line for logic chips at its factory in Yamagata prefecture to early 2000 from January 1999, he said. Average prices of 16-megabit DRAMs fell about two-thirds in 1997. The spot price, or price for immediate delivery, of the most commonly used 4x4 extended data output DRAM chip fell to just over $3 at the end of 1997 from about $9 at the beginning of the year, and has fallen below $1.50 this year, analysts said. NEC shares closed the morning session down 3.8 percent, or 51 yen, to 1,286.