Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (37107)	8/7/1998 11:33:00 PM
From: TREND1	Respond to of 53903

Analysts wary of predicting recovery By Will Wade SAN MATEO, Calif. -- While there are some signs that the beleaguered chip industry may see daylight soon, several analysts are warning against expecting too much good news too soon. Although PC sales are expected to be strong through the end of the year and some firming in the DRAM market has already been observed, overall revenues are still expected to be down this year. In short, it is possible that the second quarter was the bottom of the slump, but it's almost difficult to say whether the industry is now heading up, or if it is still mired at the bottom of the trough. One of the biggest drains on overall chip revenues this year has been the DRAM market. The segment saw overall revenues fall about 19% in the first quarter, and another 21% in the second quarter, according to Sherry Garber, DRAM analyst for Semico Research, of Phoenix. Although she is projecting revenues to be bolstered in the second half of the year by higher sales margins for faster PC100 memory chips and higher-density 64-megabit devices, the gains will not even come close to offsetting the earlier losses. "We have seen some firming in prices, but that just means we won't see prices plummeting 40% per quarter," said Garber. Although she sees revenue upticks of 20% this quarter in the DRAM market, and another 19% gain in the fourth quarter, she still expects to see an overall annual revenue decline of 29%. "I don't think the second half of the year will be the turnaround." The big issue in the memory market is capacity, and analysts have said there is anywhere from 15% to 25% more chip-making capability in the world than the industry needs. The market has started to see the first casualties from this fab frenzy, with the recent announcement from Siemens AG that they will shut down a DRAM fab in the United Kingdom (see July 31 story). Garber also noted that Samsung Semiconductor and Hyundai Electronics have both slowed their memory production, and most of the major DRAM vendors are eliminating production of 16-Mbit chips in favor of the newer 64-Mbit devices as soon as they can. Although calling this the bottom may sound optimistic, Johnson expects to see a broad, U-shaped recovery curve. That means an upturn is hardly around the corner, and there will be more bad news before there is good. Noting Siemens' declining presence in the memory field, Johnson expects to see some bloodshed as smaller firms go under, and larger firms absorb losses by spilling red ink and cutting payrolls. "We need to see evidence that there is a change in perception in the industry before we will see a major shift in orders, shipments and capacity increases," said Johnson. "I think right now it's 'show me the money' time for the industry." Note: Only parts of article where posted (g) Larry Dudash