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To: TREND1 who wrote (37940)	8/29/1998 3:07:00 PM
From: DJBEINO	Respond to of 53903

Loans Not to Be Given to Ailing Chaebol Units 08/28 The Financial Supervisory Commission (FSC) said yesterday that from next month it would not allow banks to extend new loans to ailing units of the nation's five largest conglomerates, which are blamed for their reckless investments. The FSC move is aimed at putting strong pressure on the debt-laden family-owned chaebol to get rid of their overcapacity under the government-initiated formula of swaps of businesses among the top conglomerates. ''We plan to block troubled units of chaebol from getting bank loans if they are found to have lost their competitiveness because of reckless overexpansion,'' said Lee Hun-jai, chairman of the FSC. Lee reported the plan to the National Assembly standing committee on financial and economic affairs. Accounting firms are now conducting analyses on the five biggest business groups at the request of the financial supervisory agency in order to bring light to their reckless investment drives in past years. The five groups are Hyundai, Samsung, Daewoo, LG and SK. The FSC has targeted auto, semiconductor and oil refinery industries for restructuring in a bid to eliminate overcapacity. Under the FSC plan, troubled units of the top-five chaebol will have to work out measures to restructure their overextended businesses. The targeted chaebol firms are also required to map out measures to improve their financial structures, which will be approved by their main creditor banks by the end of this year. Industry sources predicted that the restructuring of unprofitable and overinvested chaebol units will gather speed when a successful bidder for insolvent Kia Motors Corp. and its sister firm Asia Motor Co. is selected in an international auction Sept. 1. The financial watchdog has also decided to inject public funds into the nation's seven weak banks only if they merge with other banks. The government support is supposed to be used to boost the 8 percent capital adequacy ratio set by the Bank for International Settlements (BIS). In addition, the FSC plans to participate in capital increases of 13 sound banks, which were found to have failed to meet the 8-percent BIS requirement. In return for government equity capital, the banks will have to implement more radical restructuring and recapitalization plans.

To: TREND1 who wrote (37940)	8/29/1998 4:12:00 PM
From: DJBEINO	Read Replies (2) \| Respond to of 53903

DRAM Prices Are Making Comeback Industry Breathing Sigh Of Relief As Prices Begin To Stabilize Once Again By Amber Howle Irvine, Calif. .............. The DRAM industry finally may have seen its darkest days. According to some analysts and executives, DRAM vendors have reason for hope after two and a half years of declining prices. Recent factors such as the Asian flu, major vendors' slowing down production and PC OEMs' stocking up on components to avoid being caught short in the face of fourth-quarter demand have helped firm up DRAM prices in the last two months. The average prices of 16-Mbit DRAM, for example, have edged up between 50 cents and $1, according to chip makers and market analysts. Cuts in production of 16-Mbit and 64-Mbit DRAM have helped correct prices in the last month, said Mike Zaldivar, director of procurement at Viking Components Inc., based in Rancho Santa Margarita, Calif. It is hard to determine whether Asian companies can afford to gear up for the next increase in demand, said Bill McClean, president of IC Insights, a Scottsdale, Ariz.-based semiconductor market-research firm. Some of them, he said, may be forced to drop out of the market, which would cause a shortage and drive some prices up further. If the Asian flu causes a shortage in the semiconductor industry, it will be concentrated in the memory market because "that's where Asian companies have the biggest presence," said McClean, adding that such a shortage would not be felt for a few years. The threat of enforcement of antidumping laws may be keeping some of Asia's high-volume manufacturers in check, said Steve Cullen, senior DRAM analyst at Cahners In-Stat Group, Scottsdale, Ariz. The U.S. Commerce Department has scrutinized over several years allegations of DRAM and SRAM dumping by companies based in South Korea and Taiwan. In some of those cases, the U.S. International Trade Commission has assessed penalty tariffs. The European Electronic Components Association has asked the European Union to investigate allegations that companies based in South Korean, Japan and Taiwan have dumped DRAM products in Europe. "Although it's moving at bureaucratic speed, the mere filing of it is enough to attract some attention," Cullen said. Samsung Electronics Co. Ltd. and Hyundai Electronics Industries Co. Ltd. recently announced production slowdowns. Meanwhile, three Texas Instruments Inc. fabs acquired by Micron Technology Inc. may be partly or entirely shut down while they are re-equipped, a Micron spokeswoman said. Such closings could put a small dent in global monthly DRAM output. The DRAM plunge has been attributed to a glut that beset the industry when overly optimistic manufacturers responded to the emergence of memory-hungry PCs running new Windows applications. The best bet for VARs during the price free fall had been to wait until the last minute to buy DRAM, then hope prices did not drop further. When VARs were lucky, prices would go up a little. "It's good for the VAR who manages inventory properly," Cullen said. "Otherwise it's like having a refrigerator full of fish when the power goes off." Although profit margins might have dropped for the DRAM makers themselves, it was unclear how VARs were affected because the value-added percentage they provide tended to be more stable than DRAM prices, he said. "When DRAM prices are low, VARs may certainly have better margins," Cullen said. The shift from 66MHz to 100MHz memory bus has resulted in a minor shortage of PC-100 SDRAM, said Mike Keskinen, director of purchasing at Advantage Memory Corp., Irvine, Calif. "We try to keep a lot of the PC-100-type product in stock. . . while a lot of our competitors will outsource that part." crn.com