Taiwanese DRAM makers cut capital spending
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A&#160;sharp decline in DRAM prices&#160;has caused some Taiwanese DRAM makers to cut back on their capital spending plans this year in a bid to shore up the market.&quot;Right now, there is a huge supply in the market,&quot; said Charles Kau, president of Inotera, during a news conference in Kuei Shan, Taiwan.Prices have dropped so much that its hard for DRAM companies to make money. On Tuesday, Inotera Memories reported an NT$3.7 billion (US$114.3 million) loss for the fourth quarter of 2007. Nanya Technology reported an even larger loss, of NT$8.2 billion, for the same time period.To combat falling prices, Inotera slashed its 2007 spending and will spend far less on new factories and production lines this year. The company spent NT$44 billion last year to install production lines at a new factory in Taiwan. But the spending figure ended up less than the NT$51.4 billion it had proposed to spend earlier in the year. For 2008, Inotera&#39;s spending will drop even more, to NT$30 billion, as it refits production lines with newer technology that makes chips smaller and more powerful.Nanya Technology reduced its 2007 capital spending to NT$47 billion from a projected NT$60 billion. The company started building a new state-of-the-art factory last year, a plant that will increase production throughout this year. In 2008, Nanya plans to spend NT$40 billion.&quot;This year, capital spending discipline is very important,&quot; said Kau. Spending less can help companies shore up their finances. DRAM factories are expensive, costing around US$2.2 billion or more each, depending on the size and projected output. Companies in the industry depend on strong cash flow as well as loans to pay for the factories.A glut has sent DRAM chip prices tumbling. The contract price of 1Gb DDR2 chips that run at 667MHz fell to US$1.81 each as of Jan. 21, according to DRAMeXchange Technology, which operates a clearinghouse for the chips. Prices of the chips were at $3 at the start of October, when the current price slump hit.Executives at Inotera and Nanya Technology&#160;forecast a rebound in prices&#160;in the second half of this year, as PC demand rebounds.&quot;Currently, we&#39;re optimistic about the second half because our customers are optimistic about the second half,&quot; said Pai Pei-lin, a vice president at Nanya Technology. He said he hopes the new service pack for Microsoft&#39;s Vista OS, which is due out shortly, will further spur PC buying and help the DRAM industry rebound. More DRAM chips go into PCs than any other product.
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Diebold Inc. , the leading maker of automated teller machines, on Monday reduced its third-quarter and full-year earnings forecasts as it absorbs costs for recertifying its electronic voting machines in California and for expenses related to a pending civil action in that state.
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Infineon Technologies AG, a German manufacturer of DRAM (dynamic RAM) has agreed to plead guilty and pay a US$160 million fine for attempting to fix prices in the DRAM market, the US Department of Justice (DOJ) announced Wednesday.
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(InfoWorld) - Qimonda, one of the world's largest DRAM (dynamic RAM) chip makers, plans to invest â¬400 million ($525.3 million) on two chip factories in Asia, the company said Thursday. The German chip maker plans to double the capacity of a memory chip assembly plant in Suzhou, China by adding a second building on its site, at a total investment of â¬250 million over the next three years. Construction will begin this month. The company will hire about 1,300 more people to staff the new factory building. Qimonda will also invest â¬150 million over five years on a DRAM module assembly plant in Johor, Malaysia, near the border to Singapore, the company said in a statement. Construction is planned for the middle of this year, with production expected to commence in 2008. The new site will require 3,000 employees.
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Prices for DRAM chips stopped their long slide during the first half of July, according to a report released today.
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NEW YORKâSoftware maker Computer Associates International Inc. says it will cut 800 jobs, or 5 per cent of its workforce, to reduce costs amid weaker demand and falling prices for software and services.
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Three more Taiwanese chip makers plan to&#160;spend significantly less money on new factories and equipment&#160;this year as a DRAM (dynamic RAM) glut and uncertainty about the global economy weigh.Lower capital spending forecasts in the chip industry are a sign the global IT industry is on edge about future demand. Analysts have expected DRAM makers to cut back on spending for a long time due to&#160;falling chip prices. Prices for mainstream DDR2 (double data rate, second generation) chips remain below production costs, and most DRAM makers have reported losses for the fourth quarter.Powerchip Semiconductor, Taiwan&#39;s largest memory chip maker, Wednesday said it plans to spend NT$35.1 billion (US$1.09 billion) on new chip factories, technology and production line equipment this year, less than half the NT$86.3 billion it spent last year.Powerchip&#39;s smaller rival on the island, ProMOS Technologies, also more than halved its projected 2008 capital spending to US$800 million, down from US$1.84 billion last year. The company also put the expansion of its fourth 12-inch factory on hold pending a rebound in the DRAM market.United Microelectronics (UMC), the world&#39;s second largest contract chip maker, forecast its 2008 capital spending at US$500 million to US$700 million, down from US$900 million last year.The company&#39;s customers have turned cautious due to global economic worries, said Jackson Hu, CEO of UMC, at an investors&#39; conference in Taipei on Wednesday. The company forecast its chip shipments will decline as much as 15 percent in the first quarter, compared to the fourth quarter of last year as chip demand weakens, particularly for communications chips.Global semiconductor equipment spending is forecast to fall 9.9 percent to US$40.3 billion this year, from US$44.8 billion last year, according to Gartner. The market researcher blamed over-investment by DRAM makers in 2007 for the cutback in semiconductor capital spending this year. Concerns about a U.S. economic recession have also put chip makers in a cautious mood, Gartner said in a report published early this month.&#160;
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Japanese firms cut capital spending by  4.9 percent in April-June from a year earlier, data showed on  Monday, confounding forecasts and adding to views that the Bank  of Japan will hold off from raising rates this month.
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THE SITUATION: Squeezed by rising materials and health care costs and lower vehicle production, No. 1 auto supplier Delphi Corp. plans to cut 8,500 jobs worldwide next year after eliminating more than 9,000 in 2004.
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German DRAM (dynamic RAM) maker Qimonda put the construction of an advanced semiconductor factory in Singapore on hold and slashed its planned capital spending for 2008 after reporting a steep first-quarter loss.The company blamed a 40 percent&#160;drop in DRAM prices&#160;for a &#8364;598 million ($866.3 million) net loss in its fiscal first quarter, which ended Dec. 31. Qimonda&#39;s sales reached just &#8364;513 million during the period, down 56 percent from the &#8364;1.17 billion in sales it reported one year earlier.A massive 73 percent drop in DRAM prices over the course of last year has memory chip makers scurrying to realign their business strategies. On Tuesday, Qimonda&#39;s joint venture partner, Nanya Technology, and their joint venture,&#160;Inotera Memories, both posted losses and announced&#160;lower spending&#160;on new production lines for 2008.Qimonda had much the same to say. The company cut its proposed capital spending for fiscal 2008 by &#8364;250 million down to a range of &#8364;400 million to &#8364;500 million. Due to the reduction, the construction of a new 300-millimeter (12-inch) memory chip plant in Singapore has been put on hold, Qimonda said in a statement.The DRAM market took a turn south last year as companies built too many new factories and demand for new PCs armed with Windows Vista failed to meet expectations. The resulting glut sent DRAM chip prices tumbling.The contract price of 1Gb DDR2 (double data rate, second generation) DRAM chips that run at 667MHz fell to $1.81 each as of Jan. 21, according to DRAMeXchange Technology, which operates a clearinghouse for the chips. The chips were $3 each at the start of October, when the current price slump hit.Qimonda noted the 40 percent decline in the October to December period was one of the strongest declines ever, and that even previously announced measures to cope with the price slide could not compensate for the difficult market environment.The company also said it is already reassessing its outsourcing strategy. Qimonda has worked with several partners in Asia to contract manufacture its chips and in technology transfer schemes aimed at sharing the cost of research and development. These partners include Semiconductor Manufacturing International (SMIC) of China, as well as Nanya Technology and Winbond Electronics of Taiwan.&#160;
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National Semiconductor Corp., which makes analog chips used in cell phones, computers and televisions, said Thursday it is cutting about 550 jobs, or about 6 percent of its global work force, as it copes with an inventory buildup and lower demand.
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(InfoWorld) - The global chip market is suffering from falling prices in microprocessors and memory chips, bad news for companies but great for users. Steep declines in DRAM (dynamic RAM) for PCs and NAND flash memory, used in a variety of gadgets including digital cameras and iPods, as well as microprocessors prompted the Semiconductor Industry Association (SIA) to slash its global sales forecast for this year to US$252 billion, just 1.8 percent growth compared to last year. The previous estimate called for sales growth of 10 percent this year. Sales of gadgets themselves are on track to meet forecasts, however, SIA said. Chip shipments overall remain healthy, as does end-user demand. But prices continue to fall for a variety of reasons, including a glut in the memory market and a price war between Intel Corp. and Advanced Micro Devices Inc. in microprocessors. "End markets continue to be strong, with consumers realizing major benefits from lower chip prices coupled with ever-increasing performance and functionality from advances in chip technology. Despite a forecast of slower growth, we expect that global sales of microchips will surpass last yearâs record level," the SIA said in a statement on Wednesday. Intel and AMD have been battling each other through price reductions for over a year now, and reports indicate that Intel will cut prices on some microprocessors again in late July. The price war has been good to consumers, delivering more technically advanced microprocessors at a lower cost. Microprocessors are generally the most expensive chip inside a PC. The DRAM market has been hit the worst. The price of mainstream 512M-bit second-generation double data rate (DDR2) DRAM that runs at 667MHz has plunged 72 percent so far this year to US$1.79 per chip, according to DRAMeXchange Technology Inc., a Taiwanese clearinghouse for the chips. The market research division of the company has noted that the chips appear to be bottoming out, and that prices could tick up a bit later this month. DRAM price reductions for users normally come a few weeks or a month after the spot DRAM market falls. NAND Flash memory has suffered a similar fate as DRAM, but not quite as steep a decline. A glut of the chips early in the year has been wiped out by memory makers, which tweaked production lines to make more DRAM instead of NAND flash. Prices of 8G byte NAND has fallen 18 percent his year to US$9.26, according to DRAMeXchange, while the 4G byte capacity has dropped nearly 15 percent to US$5.69. The SIA expects PC and mobile phone sales to rise 10 percent each this year. Mobile phone sales may give chips a bigger boost, however, because users are buying more 3G (third generation communications) handsets, which contain more chips than older phones. Sales of personal media players and digital music players are expected to grow by more than 20 percent this year, SIA said, but noted that price competition in the market will likely keep NAND flash chip prices tame. The SIA report followsÂ a similar estimation of the global chip industry by Gartner. A few weeks ago, the market researcher lowered its forecast to just 2.5 percent growth to US$269.2 billion this year, down from an earlier estimate of 6.4 percent. Â ADVERTISEMENTIBM Information On Demand 2006Industrial Industry Leaders, please join us at IBM's premier information management global event, IBM Information On Demand 2006, October 15-20, Anaheim, CA. More IBM business and technical solutions content in one place than ever before! Select from  over 800 sessions. Register today!
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(InfoWorld) - BenQ blamed poor product management for racking up losses of over â¬840 million ($1.07 billion) at its mobile division, BenQ Mobile. The poor management led to cost overruns and launch delays, and the losses prompted BenQ to cut off funding from the mobile division last week. The Taiwanese company said it simply is not big enough to sustain such losses, which stretched from the time itÂ took over the German handset divisionÂ from Siemens last October through to the end of last month. BenQ's stock capitalization is only â¬640 million, it said. The company was in talks with Siemens about possible ways to save BenQ Mobile up to two weeks before the decision was made to stop funding it and let itÂ file for bankruptcy protectionÂ in Germany, a decision announced last Thursday. Siemens paid BenQ â¬250 million last year to take the mobile division off its hands. "There have been some reports that said we 'just walked away.' This was a really tough decision, it wasn't at all easy to walk away," said Eric Lei, chief business strategy officer at BenQ, in a group interview on Tuesday with reporters. On Monday, Siemens announced that it had set up a â¬35 million fund toÂ aid BenQ Mobile workersÂ at risk of losing their jobs, and expressed shock at BenQ's decision to "put its people on the street." The Taiwanese company said it believes there is workers' insurance to protect BenQ Mobile's 3,000 employees, and that it currently has no plans to put money into any kind of worker fund. At the heart of the trouble with BenQ Mobile was an inability to turn around product management problems, BenQ said. The Taiwanese company stopped short of laying blame for the failure on any specific group, saying that some German handset projects went awry, as did some on the Taiwanese side, while poor communication between Taipei and Munich hurt other projects. Without the product management issues, BenQ Mobile could have broken even, said Eric Yu, BenQ's chief financial officer. Some news reports have alleged name calling and legal threats from both sides over the fate of BenQ Mobile workers after the bankruptcy filing. BenQ executives said there has been no official contact between the two companies and that the talk is mere speculation. One point of contention that has been widely reported is that Siemens still owes BenQ money as part of the original deal to take over the handset division. Lei said the figure is over â¬150 million, but would not be more specific. He said that BenQ expects that Siemens will honor the contract and pay the figure, some of which goes to BenQ and some which should go to BenQ Mobile. One news report had said Siemens was looking into ways to pay the entire amount to BenQ Mobile so that it could benefit displaced employees. The German electronics giant said its decision to sell the mobile phone division to BenQ provided the greatest possible benefits to employees at the time of the sale, and that closing the business outright would have been a less expensive option. BenQ had presented a credible plan for operating and expanding the mobile phone division at the time of the sale, and Siemens believed it was sincere, it said. Â
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Acer Inc., Taiwan's top personal computer maker, said its net profit for the first three quarters to September fell 34.8 percent to 3.83 billion Taiwan dollars (114 million US).
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By Kyodo News International, Tokyo  Feb. 13--TOKYO -- Sony Corp. said Tuesday it will sharply reduce capital  expenditures for its semiconductor operations over the next three years as  part of its efforts to focus on money-making products.
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High performance analog chipmaker National Semiconductor today lowered its revenue guidance for its fiscal Q2. The new guidance for the quarter calls for revenues to range from $445 million to $450 million
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(InfoWorld) - Qimonda, the world's second largest DRAM (dynamic RAM) maker, has expanded a technology and production pact with Taiwan's Winbond Electronics to provide the company with 80-nanometer manufacturing technology. The deal extends Qimonda's strategy of sharing its research and development expenses by licensing out chip manufacturing technology to partners such as Winbond, Nanya Technology, and Semiconductor Manufacturing International Corp. of China. The deals also help Qimonda control costs. The company sources chips from these companies, enabling it to rely on them for a steady supply of DRAM without having to spend billions of dollars on new chip factories. The German company,Â formerly the memory chip divisionÂ of Infineon Technologies, will also continue to source chips from Winbond, it said in a statement. The deal extends a partnership begun in 2002, when Infineon agreed to transfer its 110nm technology to Winbond in return for a portion of its output.