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

To: Fabeyes who wrote (40192)	10/20/1998 11:26:00 AM
From: Bipin Prasad	Read Replies (1) \| Respond to of 53903

LOOKS LIKE ONCE THEY DROP THE DRAM THEY MAKE MONEY -- WHAT DOES THIS SAY ABOUT THE DEAL WITH MU. Where did you get that idea from? If so, how come sox is up 9.930 and MU is up 1 1/8? InSook

To: Fabeyes who wrote (40192)	10/20/1998 11:29:00 AM
From: DJBEINO	Respond to of 53903

ANALYSIS - JAPAN'S CHIPMAKERS TO MISS RALLY OPPORTUNITIES TOKYO, Oct 20, 1998 -- Nearly three years since the memory market faded, the decline appears to be bottoming out. However, Japan's chipmakers, still pursuing capital spending cuts, will be slower to recover. Timely responses to prevailing conditions are imperative amid this maelstrom of change, but poor operating results have eroded the necessary investment reserves and dulled the capabilities of Japan's big players. The mood at a recent executive meeting at Micron Technology Inc., headquartered in Boise, Idaho, was particularly buoyant as discussion focused on the drastic investment cuts and successive plant closures of Japanese chipmakers. Micron remains bullish despite 1998 marking its first loss in 11 years. Steven Appleton, CEO, says with complete confidence, "By the end of 1999, monthly production of dynamic random access memory (DRAM) chips could be 50 million units (equivalent to the output of Japan's five big chipmakers)." This year, then, would be the perfect time for Japan's chipmakers to launch a counterattack. Akira Minamigawa, a senior analyst at IDC Japan, says that reduced spending over the last three years has erased the DRAM glut and paved the way for a rally in 1999. A senior analyst at Dresdner Kleinwort Benson Securities Ltd., says "When pessimism reigns and investments are curtailed, that is the time to act." According to ratios of supply to demand calculated by this firm, 1998 will see a worldwide DRAM glut of 15%, which will turn to a 4% shortage in 1999. This reversal is due to the capital spending pressure that squeezed the ability of producers to raise capacity. Demand is expected to soar by over 70% next year, outpacing a projected 45% increase in production capacity. Japan's sophisticated technologies and low prices, even compared with Micron, should yield high profit. But NEC Corp., Toshiba Corp., and Hitachi Ltd. have lowered chip-related investment plans for fiscal 1998, reducing the aggregate spending of the five big domestic makers to 430 billion yen, or less than half the 1995 peak. One reason is the reluctance of banks to fund them. The prince-to-pauper potentials of DRAMs has encouraged chipmakers to emphasize products with stable profitability potential. Says an executive director at Toshiba, "The market may recover but it will be smaller, so we will apply our resources to more value-added products." Japan's chipmakers have enormous production facilities and personnel, and without the DRAM business, operating rates at mainstay domestic plants would plummet. If the companies were prepared for a full retreat, with massive extraordinary losses and widespread layoffs, that would be a different story. But the half-hearted retrenchment policies could have a negative effect. Indeed, a lack of survival strategies and the tendency to stick together could mortally wound this troubled industry.