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: Skeeter Bug who wrote (40903)	11/15/1998 10:10:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

The worst is seen to be over for DRAM makers: South Korean anaylsts SEOUL, Nov 15 (AFP) - The worst appears to be over for the world's chip makers, with South Korea's Samsung Electronics Co. Ltd. best positioned to benefit from an expected upturn next year, analysts here said. "The worst is over for DRAM (Direct Random Access Memory chips) makers," Dongwon Securities analyst Jeon Woo-jong said. "We are seeing positive signs indicating that the DRAM industry cycle is entering a recovery phase from 1999 after three years of downturn." Analysts also said Samsung Electronics, as a frontrunner in the sector, should benefit most from the recovery, especially given the standing of its local counterparts. The DRAM market should see a balance in demand and supply from the end of 1999 with a likely supply shortage in 2000, Jeon told AFX-Asia, an AFP-affiliated financial newswire. "The recovery is possible due to global chip makers' withdrawal from the DRAM market and reduced investment," he said. He said demand for personal computers was unlikely to deteriorate to any worrisome level next year, even in Asia, where companies will need higher-end PCs to resolve "Y2K" -- or millenium bug -- problems, which should keep demand for DRAMs strong. While DRAM prices are expected to decline moderately in the first quarter of 1999 on seasonally low demand and as new technology produces more chips on the same-size wafer, there should be a pickup afterwards, he said. He said second-line chip makers can be expected to survive until next year as they move up to 128 megabite DRAMs from current eight-inch wafers. "However, the global chip market will see only a handful of top-line makers surviving when 256 megabite DRAMs replace lower-end DRAMs, likely from 2000." "Second-line makers will not be able to make the investment for the 12-inch wafers to make 256M DRAMs," Jeon said. Samsung Securities chip analyst Eugene Ha also agreed a recovery was in sight after a year in which prices have dropped to rock bottom amid a glut in the market which forced chip makers to temporarily halt production. "Although current market conditions do not point to an obvious turnaround, we believe the DRAM market will recover from next year," he said. The DRAM market is improving faster than expected and will see a recovery in 1999 as some withdraw from the sector and the industry sees the impact of reduced investment during the recent downturn, Hannuri Salomon Securities chip analyst Koo Bonjun said. "This reduced investment against rising demand, which is growing at about 80 percent annually, should greatly ease" the problem of oversupply, Koo said, estimating 1998 DRAM sales at 13 billion dollars and 18 billion in 1999. He said Japanese chip makers have cut their investment in the sector by about 40 percent this year and will reduce it by a further 30 percent in 1999, while Taiwan companies are expected to maintain their recent investment levels until 1999. He said DRAM prices have fallen about 70 percent annually in the three years to 1998, with a 20 percent fall seen in 1999. "However, any slowdown in demand in the first half or first quarter of 1999 will not mean any long-lasting slump in the sector," he said. Hannuri's Koo said "Samsung Electronics' cashflow is very strong and its cashflow will further improve in 1999" as the expected recovery comes through. Samsung will benefit from the transition to higher-end 256M DRAMs from 64 megabite DRAMs, with smaller companies struggling to match this progression, which is expected to be seen fully in late 1999, he said. In practice, only Samsung Electronics, Japan's NEC Corp. and Micron Technology will be able to effectively compete in the 256 megabite DRAM market, he said. Taiwanese manufacturers have fallen behind on the technology side and are unlikely to be able to effectively enter this segment, he explained. Koo said Samsung Electronics should report a net profit of about 330 billion won (250.9 million dollars) in 1998, while Hyundai Electronics and LG Semicon cannot avoid losses.