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To: Ramsey Su who wrote (7496)	1/6/1999 9:06:00 PM
From: Ian@SI	Respond to of 10921

Ramsey, One of the big fears overhanging the Capital Equipment market has been the belief that there's "tons" of excess capacity just waiting to come online as prices improve. Jim Bagley laid rest to that fear on CNBC this morning. RealPlayer replay is available through the NASDAQ site. Essentially, he gave a revised version of the "overripe bananas" story. i.e. Nobody wants overripe bananas. This morning he reminded us that capacity, like bananas becoming overripe, becomes obsolete every 18-24 months as improved technology leaves the old stuff far behind. As I'm sure you must know, much of that "excess capacity" is in serious danger of becoming very over ripe. FWIW, Ian. P.S. Have you EVER liked this sector?

To: Ramsey Su who wrote (7496)	1/6/1999 9:18:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 10921

FOCUS-Korea LG concedes to Hyundai-led chip merger 09:37 a.m. Jan 06, 1999 Eastern By Koo Hee-jin SEOUL, Jan 6 (Reuters) - South Korea's LG Group said on Wednesday it had agreed to a merger of its chip unit LG Semicon Co with that of Hyundai Electronics Industries Co, ending a four-month wrangle over the future control of the merged firm. But LG said it would not take any stake in the new company, despite expectations that ownership would be divided between LG and Hyundai Group. LG said in a statement it would ''hand over 100 percent of the stake in LG Semicon'' owned by the LG Group's other affiliates. An LG official said this meant the group would not take any stake in the merged company. He did not elaborate. Hyundai Electronics's President and Chief Executive Officer Kim Young-hwan told Reuters his firm had not fixed any purchase price for LG Semicon's shares, but said it would be related to the price of the firm's shares in the market. The Hyundai executive said the first step would be to evaluate LG Semicon, which would be done by an investment bank, and not Arthur D. Little, which had done an appraisal of the two Korean chipmakers for the merger late last year. ''It's not going to be a simple task. It's going to take months,'' Kim said. The merger of Hyundai Electronics and LG Semicon, both among the world's top 10 dynamic random access memory (DRAM) makers, would create the world's second-largest DRAM supplier. Kim said his company may ask LG for a debt-to-equity swap but that it was ''too early to tell what will happen.'' Hyundai Electronics's debt-to equity ratio stood at 935 percent as of end-June 1998, and claimed they had been able to slash it to 387 percent by end-1998 through restructuring. LG Semicon's debt-to-equity ratio stood at 617 percent at end-June 1998. The firm's president Koo Bon-joon told Reuters it had been reduced to around the 200 percent level at end-1998, as it separated its liquid crystal display business to form a new company by incorporating similar businesses owned by affiliate LG Electronics Inc. Hyundai Electronics's Kim said the merger would create the world's largest memory chip producer in terms of capacity with 300,0000 eight-inch wafer chips of month versus Samsung Electronics Co's 180,000. But he added that capacity does not translate into production or profitability. ''Samsung is not No.1 because they have the biggest capacity but because they have the best technology.'' Kim also said he believed the merger would benefit the global chip sector. ''This is good for the stabilisation of the world semiconductor market. It is one less unsettled factor.'' he said. The ''unsettled factor'' had prompted Moody's Investors Service to announce it may cut debt ratings for Hyundai's U.S. chip-making unit. Analysts agreed that ther merger would benefit Korea's overall economy as well as the chip sector. ''LG's decision will clear much of the uncertainty felt by foreign investors surrounding the corporate restructuring in Korea,'' said an analyst at a U.K. securities company. ''I believe the merger will also prove beneficial for the semiconductor sector for the long run, but the results will show two to three years from now,'' he said. Copyright 1999 Reuters Limited.