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To: DJBEINO who wrote (3992)	9/18/1998 10:08:00 PM
From: DJBEINO	Respond to of 9582

Experts Hoping For Chip-Market Rebound As Prices Have Stabilized NEW YORK -(Dow Jones)- The downturn in the semiconductor market, which has suffered from overproduction, may be bottoming out, analysts said at an industry gathering in San Francisco Friday. Memory-chip contract prices have risen to between $8 and $10 in recent weeks, according to Micron Technology Inc. officials. A few weeks ago, those prices were in the low- to mid- $7 range. Spot prices - which fluctuate on a daily basis, as opposed to contract prices, which are negotiated for a specific time period - have been strong for a couple of months. "It's been the most stable since pricing started heading down at the end of 1995," said Josephthal & Co. analyst Larry Borgman. Memory chip prices had plunged as much as 80% over the past year because of a glut in supplies and the Asian economic turmoil. Prices for certain types of dynamic random access memory, or DRAM, chips have fallen to as low as $1.30. Some of the world's largest manufacturers in South Korea and Japan have scaled back or halted production in an effort to stabilize prices. But analysts said demand for DRAMs is benefitting from seasonality as well as the fact that greater quantities of memory are being used in personal computers. Micron (MU) has run out of 64-megabyte DRAMs because of strong demand, said BancBoston Robertson Stephens Inc. analyst Dan Niles. He also said he believes that earnings estimates should rise. Micron is expected to post a loss of $1.23 a share in fiscal 1998, compared with earnings of $1.53 in fiscal 1997. The company is forecast to post a loss of 49 cents in 1999. For an industrywide recovery to take place, analysts say the communications industry must continue its rollout of new telecommunications equipment, such as digital wireless handsets, which have been selling briskly, and semiconductor-based networking system software.

To: DJBEINO who wrote (3992)	9/18/1998 10:15:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

Plant shutdowns start to hit home in Japan By Anthony Cataldo TOKYO - Following a spate of announced closures of unprofitable overseas operations, some Japanese chip companies are starting to make painful cuts on their native soil. Hitachi Ltd. will shut a two-year-old epitaxial wafer manufacturing facility after the high-grade wafers proved too costly for today's market, while Oki Electric Industry Co. Ltd. has confirmed it will idle production for at least one fabrication facility for 10 days in the second half of its current fiscal year. On Oct. 20, Hitachi will stop producing 6-inch epitaxial wafers at Ibaraki Semicon Materials Co. Ltd., a subsidiary of Hitachi Tokyo Electronics, and transfer the facility's 8-inch production line to a Tokyo Electronics plant. About 150 employees of the facility will be reassigned, a spokesman said. The plant closure comes on the heels of Hitachi's announced $1.8 billion loss for the current fiscal year, and a restructuring plan that resulted in a consolidation of its U.S. operations, the shuttering of its fab in Irving, Texas, and 630 layoffs. The shutdown of its epitaxial wafer plant is one way the company can cut its semiconductor production costs. "Essentially the semiconductor industry is in a downturn and there's a lower demand for the epitaxial wafers," the spokesman said. "We hope to reduce our fixed costs and have more efficient production by consolidating these lines." Currently, Hitachi produces 250,000 wafers per month at its Ibaraki facility and its two Tokyo Electronics plants in Yamaguchi and Yamanashi prefectures. The Ibaraki plant was established in 1996 as a way to ensure a steady in-house supply of epitaxial wafers, which are polished wafers treated with layers of single-crystal silicon to reduce defects and boost IC yields. At the time, Hitachi was concerned that there could be a shortage of these wafers. But many companies never made the full transition to the more costly epitaxial wafers. Some DRAM producers even switched back to less expensive polished wafers or Hi-wafers, which are considered better quality than polished but less costly than epitaxial grade. For example, only 30 percent of Hitachi's 64-Mbit DRAMs are produced on epitaxial wafers, while the rest are produced on polished wafers. The company, which produces 50 percent of the wafers it consumes, will buy epitaxial wafers from outside vendors should the need arise, the spokesman said. Masahiro Suzuki, a senior analyst with Dataquest Japan, estimated that wafer costs account for less than 5 percent of the total production costs, but chip manufacturers are doing all they can to squeeze their manufacturing costs. "With epitaxial wafers, it's impossible to have much better yields than polished wafers. And the cost is higher," Suzuki said. "Manufacturers started to use epitaxial wafers in the initial stages of 64-Mbit DRAM production, but because of the higher costs many are considering going back to polished." Meanwhile, Oki Electric confirmed reports that it is seeking ways to compensate for losses due to sluggish demand for semiconductors by idling certain manufacturing facilities. Earlier this month, the company shut down its plant in Miyazaki for three days. That fab produces 1-, 4- and 16-Mbit DRAMs, as well as some logic devices, a spokeswoman said. Oki also intends to shut down operations for seven more days during the remainder of the fiscal year that ends next March. The shutdowns could affect the Miyazaki plant or Oki's newest Miyagi plant, which produces 16- and 64-Mbit DRAMs and logic devices. Shutdowns could start next month and will be spread out over the remainder of the fiscal year, the spokeswoman said. By the end of this month, Oki will also shutter an assembly plant in Tualatin, Ore. eet.com