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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: Bruce A. Thompson who wrote (3818)	9/18/1998 10:19:00 PM
From: Scotsman	Respond to of 4697

FOCUS-Taiwan chipmaker (UMC)halts T$500 bln plan By Alice Hung TAIPEI, Sept 17 (Reuters) - United Microelectronics Corp (TW:2303), Taiwan's second largest microchip maker, said on Thursday it had decided to halt a massive T$500 billion ($14.5 billion) investment plan due to oversupply in the industry. "We have decided to put the T$500 billion Tainan project on hold for the time being," John Hsuan, co-chief executive officer of United Micro group, said at a news conference. In June 1997, United Micro said it would invest T$500 billion over the next 10 years to build several 12-inch wafer fabrication plants at the Tainan science-based industrial park in southern Taiwan. It would have been the island's single biggest industrial project. But United Micro said on Thursday that current industry conditions did not justify such an ambitious plan. "The whole semiconductor industry is under very serious oversupply pressure," Hsuan said. "I see no reason to justify why people should invest in 12-inch fabs now." Analysts were not surprised. "The company is making a right decision. It would be extremely unrealistic for the company to continue its planned investment plan," said Oliver Fang, National Securities' institutional sales chief. "The timing is simply not right." Nomura Securities' research head Jeffrey Liang also praised the move. "Since over-capacity is still a major concern in the industry, it makes sense to keep the cash." United Micro is one of the world's leading makers of made-to-order semiconductors, a specialist industrial sector known as "foundry chipmaking." In Taiwan, it is second in production value only to microchip powerhouse Taiwan Semiconductor Manufacturing Co (TW:2330). United Micro's U.S. division president, James Kupec, said it would take at least a year for the industry to recover. "In about a year or a year and a half from now, the oversupply situation will change," he told the news conference. But before that, Kupec said he expected to see 10 percent price erosion in the first half of 1999. In 1997, upbeat Taiwan's microchip makers shook up the industry by announcing plans to invest over US$80 billion to build more than 30 advanced wafer fabrication plants in the next 10 years. In addition to United Micro's giant project, Taiwan Semicon said it would build six advanced wafer-fabrication plants as part of a 10-year, T$400 billion investment in Tainan. Several chipmakers followed suit, announcing similar projects with investment ranging between T$100 billion and T$200 billion. As the regional financial crisis started to unfold, many Taiwan chipmakers were forced to slow down or suspend originally planned investments. Taiwan Semicon lowered its 1998 capital spending plan to US$920 million from US$1.3 billion in late June. Hsuan said United Micro remained committed to investing in the industry, but he said not every company would be able to fulfil pledged investments. "I would predict about 50 percent of the programmes will be stopped. This is not a problem just for Taiwan, it's a problem for the global semiconductor industry," Hsuan said. Nonetheless, Hsuan said United Micro was in talks to acquire an eight-inch wafer fabrication plant in Europe, Japan or the United States. "We feel buying existing capacity is cheaper than building a new one now," he said. Hsuan said the deal would be finalised before the end of September. Hammered by a sluggish semiconductor industry worldwide, prices of Taiwan's semiconductor shares have slumped. United Micro shares stood at T$34.10 on Thursday compared with a 1998 high of T$73.64, although the stock closed 30 cents higher on the day. In August, United Micro slashed its 1998 pre-tax profit forecast to by 49 percent to T$5.442 billion and its sales forecast by 39 percent to T$18.347 billion. (US$1=T$34.5)

To: Bruce A. Thompson who wrote (3818)	9/18/1998 10:21:00 PM
From: Scotsman	Respond to of 4697

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: Bruce A. Thompson who wrote (3818)	9/20/1998 10:21:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 4697

Bruce, I think that WFR will hold on, but what I think and what Huls will do may be different things. The main question, in my mind, is how fast (if at all) will a recovery in Asia be. If Japan keeps playing with fire it may precipitate a true depression in the rim (and quite a recession her and in Europe)and than the time horizon for a recovery may be lengthened to few years. I do not think that will actually happen, but it is a definite possibility. Zeev