Semiconductor price forecast

Wednesday, 04 July, 2001

Japanese electronics groups are set to revise earnings forecasts downward in coming weeks because of the collapse in semiconductor prices and demands for personal computers and mobile phones.

Industry executives and analysts expect Fujitsu, Hitachi, NEC and Toshiba to be the worst hit.

Although the size of revisions is unclear, the news is certain to hit share prices across the sector because Japanese electronics groups depend heavily on chips for profits.

Semiconductors and other components generated nearly 50% of operating profits for Mitsubishi and Toshiba last year.

Stock prices have begun to tumble amid warnings from Transmeta, Philips and Infineon in recent weeks.

The downgrades come in spite of Japanese manufacturers' attempts to limit exposure to commoditised producs such as dynamic random access memory and focus instead on flash memory, logic chips and other value-added devices, supposedly more resistant to market fluctuations.

Slower-then-expected sales of mobile phones and PCs, and a collapse in prices across the sector are the main problems.

Flash memory prices have fallen about 20% since last year, according to Fujitsu.

D-Ram prices prices fell 30% in the first three months of this year and another 20% in the following three months.

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