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To: SlowThinker who wrote (41789)	12/30/1998 10:12:00 AM
From: DJBEINO	Respond to of 53903

12-31-98 Chipmakers' merger may violate U.S. antitrust law, ministry says The proposed merger of Hyundai Electronics and LG Semicon, both computer chipmakers, could stir up a trade dispute with the United States, the Ministry of Foreign Affairs and Trade said yesterday. In a report on the nation's mid- and long-term trade policy, the ministry said that the "big deal" merger could become a target of the U.S. antitrust law. Under its antitrust act, the United States takes punitive measures against corporate consolidations at home and abroad if they are deemed to run counter to competition in the U.S. market. The U.S. market is one of the largest markets to which Korean chipmakers have been actively exporting their goods. "It may be possible for the U.S. government to make an extra-territorial application of its antitrust act to the Korean chipmakers' merger," the report said. Korean chip makers, including Hyundai Electronics and LG Semicon, have nearly a 50 percent share of the world memory chip market. The ministry said the Korean chipmakers' share is likely to increase as some Japanese companies are closing factories and some Taiwanese corporations are giving up production. In its policy proposal for the 2000-2005 period, the ministry called on the government to prepare for a free trade agreement (FTA) with North Korea. It urged the government to make efforts to reach a tentative inter-Korea accord before an FTA is concluded in the long run. To facilitate inter-Korean economic cooperation, the government is being urged to build on infrastructure for direct trade with and investment in North Korea. The proposed infrastructure projects include those for transportation between South and North Korea, distribution centers and communication facilities. The ministry also recommended that the government persuade North Korea to join the World Trade Organization and other economic cooperation bodies.

To: SlowThinker who wrote (41789)	12/30/1998 12:50:00 PM
From: Dave Gahm	Read Replies (2) \| Respond to of 53903

SlowThinker, You have made some valid, thoughtful points, and you are correct that MU will continue to drop their costs. What you have failed to address is the "Achilles heel" of that cost reduction strategy, namely the impact of all that cost reduction (increased bit production)on the market price of DRAM. When MU had 4% of the DRAM market, they could rapidly ramp production without a big impact on the market, but as they have grown their increased output has played a larger role in driving prices down. I think most objective observers, and certainly the Asian producers, will testify that MU's strategy has been instrumental in the collapse of pricing. It was interesting that with the inclusion of the TXN fabs (partial quarter) MU's cost per megabit was flat and bit production was only up 10%. Part of the reason was the total shutdown of Milano as they upgrade to 8 inch lines. Even with this temporary, and involuntary, production restraint during the strongest demand period of the year, pricing did little more than stabilize. As MU doubles bit production over the next couple quarters, and the Koreans also ramp output, it seems very unlikely that this price stability will continue. In the long term MU may win this war of attrition, but in the short run I don't think the stock will react favorably to another plunge in DRAM prices. Regards, Dave