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To: MileHigh who wrote (19532)	4/29/1999 5:15:00 PM
From: REH	Respond to of 93625

Taiwan Circuit Board Makers 1Q Pft Hurt By Price Declines By BAKER LI Dow Jones Newswires TAIPEI -- Aggressive industry-wide output expansion by Taiwan's printed circuit board makers did not lead to the profit growth that had been hoped for. The production oversupply instead induced fierce price competition that slashed first-quarter profits at some of Taiwan's leading manufacturers. Moreover, most analysts don't expect earnings to improve anytime soon, as the oversupply won't be completely absorbed in the short term. "Falling profit margin was the main story and things won't get better in the second quarter (of the year)," said Michael Siao, manager of a NT$1 billion Technology Fund at Fubon Securities Investment Trust Co. Siao said he won't allocate any of his fund's money on PCB stocks in the second quarter. On Wednesday, WUS Printed Circuit Co. (Q.WPC), one of Taiwan's largest PCB makers, reported that net profit for the first three months of 1999 fell sharply to NT$57.9 million, or NT$0.19 per share, down 75% from NT$236 million, or NT$0.79 per share, in the same period a year earlier. Meanwhile, WUS cut its 1999 net profit forecast to NT$802.6 million from the previous estimate of NT$994.6 million on fears that falling product prices will continue to cut into its earnings, said C.K. Chen, the company's financial controller. Margins of the company's products have fallen to around 20%, compared with the 25% level at the end of last year, Chen said. Gold Circuit Electronics Co. (Q.GCE), another leading Taiwanese PCB manufacturer, announced Wednesday that its pretax profit for the January-March period of this year slid to NT$50 million, a 79% decline from NT$240.8 million in the year-ago period. Taiwan produced NT$91 billion of PCBs in 1998, making it the island's second largest electronics component industry after semiconductors. In addition, Compeq Manufacturing Co. (Q.CM), the island's largest PCB maker, said Monday that pretax profit for the first quarter of 1999 fell 22% from a year earlier to NT$725.2 million. The company cited a decline in profit margins, which are now at 20%, down from 30% at the end of last year. Compeq's average product price in the first quarter fell to US$0.12 per square inch from US$0.15 the end of last year, according to Carl Chi, a technology analyst at Asia Pacific Securities Investment Trust. Chi estimated that total PCB production from all listed companies in Taiwan in 1999 will reach 13.5 million square inches per month from the 9.7 million at the end of last year. Although Compeq Manufacturing has said that demand for its products will increase after Intel Corp.'s (INTC) newest computer memory chipsets debut later this year, industry analysts don't expect much help from that launch for the time being. "We aren't sure Intel will give orders to Compeq this year because whether Intel will launch the new chip as scheduled is still uncertain," said a PCB industry analyst at Core Pacific Securities Corp., who declined to be named. Compeq Manufacturing is one of only two companies in Taiwan with the advanced technology to produce the printed circuit boards needed to support Intel's new-generation chipsets. The other is OTC-listed Boardtek Electronics Corp. The new generation chipsets will support Direct Rambus dynamic random access memory chips, designed by Rambus Inc. (RMBS), due in the third quarter of the year. With stiff price competition in the field, small- and medium-sized PCB makers may not survive because the big are becoming bigger, said the analyst at Core Pacific. "Industry consolidation is likely and necessary in the future," said the analyst, predicting that the number of the local PCB makers will shrink to fewer than 70 within the next five years from the current 140. To cope with price competition and reduce operation costs, more local PCB makers will also consider setting up plants in China. "In order to reduce costs and strengthen our competitiveness, we're evaluating the feasibility of investing in mainland China. The reasons are simple - cheaper labor and land costs," said a senior official at Gold Circuit Electronics, who requested anonymity.