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To: Patrick E.McDaniel who wrote (86557)	12/22/1998 10:53:00 AM
From: Mohan Marette	Respond to of 176387

Japan-PC & Chip biz looking good. Hi Pat: Seems like all is not lost in Japan,see what you think. ===================================== Japan's PC, chip industries look brighter By Reuters Special to CNET News.com December 21, 1998, 6:20 p.m. PT Japan's computer and chip industries, mired in historic slumps, could be looking up as PC sales both at home and in the global market seem to be improving. Analysts say profits in the business year starting next April will still be meager, but that the worst may be over. "Prospects are far from rosy, but stable chip prices and higher electronic parts prices, helped by a recovery in PC demand, have brightened the business environment," said Naoki Sato, an analyst at HSBC Securities. This business year, Japan's five big computer and chip makers--NEC, Toshiba, Fujitsu, Hitachi, and Mitsubishi Electric--are expected to post a combined pretax loss of 140 billion yen ($1.21 billion), the biggest ever. Their chip divisions alone are expected to incur a combined operating loss of around 260 billion yen ($2.3 billion) because prices of 64-megabit dynamic random access memory (DRAM) chips, the main memory component of PCs, have fallen dramatically. The brightest of a handful of optimistic signs is growing sales of home-use PCs in the domestic market, which have helped create demand for liquid crystal displays (LCDs), chips, and other parts. Demand for PCs and related products such as LCDs, cathode ray tubes, and chips ballooned 60 percent in the fourth quarter from the third quarter, according to Toshiba senior executive vice president Masanobu Ohyama. "The strong fourth-quarter demand surprised us," Ohyama said recently. "Our biggest concern was a possible backlash in the first quarter of next year." The launch of Windows 98 operating software late in July and new PC models with flat panel screens and power-saving features have helped stimulate individual demand, analysts said. Desktop PC models with LCD panels are selling so fast NEC doesn't know when it will be able to deliver the products to customers, according to a spokesman. Reflecting strong demand, LCD panel makers have begun talks with PC makers to raise the price by 5 percent to 15 percent. Meanwhile, recent production cuts by South Korean makers and plant closures by some Japanese makers have helped stall the decline of 64-megabit DRAM prices. And industry officials expect tax changes in the next business year will also help raise demand for PCs in the corporate sector, which accounts for 60 percent of Japan's total PC market. In the global market, analysts say replacement purchases will help maintain a stable sales trend of PCs in the United States and Europe. "PCs and chips have now entered into a favorable business cycle as low chip and parts prices are stimulating demand," said Noboru Sasaki, an analyst at Shroders Japan. Daiwa Institute of Research said the five Japanese electronics makers can expect profits to jump 44 percent in the fiscal year beginning April 1, helped in part by their restructuring measures. But the strong yen poses a big threat to Japanese manufacturers' earnings. Daiwa expects the consumer appliance sectors, including companies such as Sony, to suffer a profit decline of 14 percent in 1999-2000, hit by the high yen.