Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Alliance Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (4774)	3/25/1999 9:15:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

South Korea tightens belt on expansion By B.H. Seo EE Times (03/25/99, 1:35 p.m. EDT) SEOUL, South Korea — Lower semiconductor prices and anticipated year-over-year earnings declines are prompting South Korean manufacturers to scale back expansion plans for the remainder of 1999. Semiconductor prices, which played a key role in Korea's economic recovery that began last August, fell below the $10 per unit level for the first time in six months, the government's Ministry of Finance and Economy reported this week. Global spot market prices for 64-Mbit DRAMs, which account for up to 70 percent of Korean IC exports, fell to $9.01 per unit on March 16 and remained there this week, the ministry said. World spot market prices for 64-Mbit DRAMs had been as high as $20 early last year before sinking to as low as $7 in July. The steady increase in semiconductor prices during the second half of 1998 and earlier this year helped pull Korea's ailing economy out of a prolonged slump brought about by last year's currency crisis and subsequent International Monetary Fund bailout. The price increases boosted the Korean economy and helped the government pay back part of the IMF loans. If, however, chip prices continue to hang below the $10 mark, a ministry official said the downturn will harm Korea's ability to pay back loans. The downturn may also be affecting electronics sales here. Samsung Electronics said last week that it expects 1999 sales to decline from last year. Yoon Jong-yong, president of Samsung Electronics, said the company has lowered its sales target for 1999 by 3.9 percent, to $15.4 billion. The company reported sales totaling $16.7 billion last year. Earlier, LG Electronics, another large Korean electronics company, said it too was dropping its 1999 sales target by 13 percent. LG said it will focus on reducing spending and increasing profitability in 1999 rather than continuing last year's business expansion. Back at Samsung, Yoon said the company will accelerate the company's restructuring, placing greater emphasis on marketing its products and pushing all of the company's units into the black in 1999. Samsung intends to slash expenses by 30 percent and lower its debt ratio from 198 percent at the end of 1998 to 185 percent, Yoon said. Samsung Electronics reported 1998 sales of $16.7 billion, including $4.1 billion in its information and communications unit ($2.9 billion in domestic sales and $1.2 billion in exports) and $8.6 billion in its semiconductor-information media unit. Exports accounted for a whopping $7.6 billion of semiconductor-information sales. Indeed, exports drove Samsung's recovery in 1998, leapfrogging more than 30 percent last year over 1997, to $10.9 billion. Conversely, domestic sales declined 19 percent in 1998, to $5.2 billion, as Korea's domestic economy stagnated. The expected downturn in 1999 is lending urgency to efforts by Korean companies to forge alliances with other consumer electronics manufacturers. Samsung, for example, this week announced an alliance with Toshiba Corp. and Thomson of France to manufacture video cassette recorders. The agreement includes an export deal worth as much as $200 million, according to Samsung. Under the agreement, Samsung will design and use core VCR components with Toshiba, and supply Toshiba and Thomson with finished recorders. Samsung expects to supply as many as 2 million VCRs to its partners by the end of the year. Hoping to become a leading VCR supplier, Samsung wants to boost exports to 5 million units annually. Company officials said they want to use the Toshiba-Thomson alliance to capture 15 percent of the global VCR market by next year. On the upside, reports this week suggested that the worst of Korea's modern recession may have passed. Government figures showed that in the fourth quarter, the country's economy contracted 5.3 percent, but that's an improvement over the 7.2 percent recorded in the second quarter of 1998 and the 7.1 percent reported in the third. Experts predict the country's economy will grow slightly this year, perhaps by as much as 2.5 percent. eet.com