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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (28168)	2/12/1999 11:35:00 AM
From: Jeffrey D	Respond to of 70976

Brian/all, the following analysis from Credit Suisse of 02/09/99. It involves MU but certainly applies to AMAT. Jeff << * LG Semicon employees returned to work today after having walked out 16 days ago. Hyundai and LG reached an agreement that guarantees LG workers employment until the end of 2000 and guarantees 10 months of severance pay if lay-offs are necessary. * LG Semicon generates close to 9% of worldwide DRAM supply and it is estimated the strike cost $100M in sales or 10-11 million 64Mbit units based on current pricing. We estimate this is 65-75% of one month's production for LG. * More importantly, it will take a minimum of 50 days before production returns to prior levels. In the meantime, production will be very volatile as the company flushes tainted product from the lines and increases tries to recapture some pre-turmoil WIP. * Due to seasonality, slow-down in PC demand after holidays and fiscal year ends for several Asian companies in March, the strike and resulting drop in production came at a good time because it will tighten up supply about the same time year-end inventory clearing normally pressures pricing. As a result, we expect pricing to remain fairly firm through the end of the Japanese fiscal year-end. * In addition to aiding the recovery of the DRAM market, the strike provides an opportunity for Micron to fill orders as its supply increases 35-45% in 2QFY99 (Feb). >>