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To: DJBEINO who wrote (4647)	2/5/1999 4:14:00 PM
From: DJBEINO	Respond to of 9582

LG shutdown affecting DRAM prices By Jack Robertson Electronic Buyers' News (02/05/99, 01:54:45 PM EDT) OEMs, already facing an uptick in memory-chip prices, could see conditions worsen due to the shutdown of LG Semicon's DRAM plants in Korea. The loss of production from LG, the world's sixth-largest DRAM producer, has more than offset a surge in output from Micron Technology Inc. and Samsung Electronics Co. Ltd., industry watchers said. While a walkout by LG workers was continuing as of late last week, a company spokesman in Seoul said the company was working to resolve worker demands for future job security. Workers at LG, which is being acquired by rival Hyundai Electronics Industries Co. Ltd., are demanding that their jobs be guaranteed for seven years. Another major issue yet to be resolved is the price Hyundai will pay for LG. Hyundai had offered about $2 billion initially-plus the assumption of nearly $4 billion in LG debt-while LG had demanded $3.6 billion. The two sides are said to be nearing an agreement. The loss of LG output in the DRAM market will be felt long after the strike is settled, said Charles Glavin Sr., an analyst with CS First Boston Securities, San Francisco. “You'll lose much more than just two weeks' production,” he said. “All wafers in progress at the time of the shutdown will be lost. In addition, there's an extended period to requalify and bring [fab] lines back up to high productivity levels.” Had LG's fabs been cranking out chips as planned, prices might well have been cut due to production ramp-ups at Micron and Samsung, Glavin said. Micron's DRAM output, measured in bits, will jump 25% in its fiscal quarter that ends this month, compared with the previous quarter, the company has said. At Samsung, DRAM output at the end of 1998 was running 40% above last summer's levels, a company spokeswoman said. The increased production hasn't affected pricing in the spot market or on OEM contracts, according to sources. Paul Myers, DRAM commodity specialist with the American IC Exchange, an independent distributor in Aliso Viejo, Calif., said spot-market prices have risen more than $1 on mainline 64-Mbit chips since mid-December. Spot prices now range from $10.50 to $11, he said. The spread between spot and OEM prices also reportedly is narrowing significantly, with contract rates nearing par with the commodity market. Glavin warned that the biggest market impact of the LG strike may be psychological. “It sends many signals to the market that DRAM supply may become tighter sooner than anyone expected,” he said. ebnews.com