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The TI-Qualcomm agreement will enable each company to begin expanding into new areas and develop multiple air-interface handsets, according to Strauss.

RK73H1HTTC1183D_Datasheet PDF

The TI-Qualcomm agreement will enable each company to begin expanding into new areas and develop multiple air-interface handsets, according to Strauss.

NEW YORK — The latest spate of earnings warnings, led notably this week by semiconductor bellwethers Intel Corp. and Motorola Inc., has erased any lingering hope that the chip sector's inventory overload is affecting only isolated industry pockets.

However, despite absorbing repeated blows, the market is onlyjust beginning to confront the possibility that what began as amere correction could be the start of a semiconductor industrydownturn, some analysts now predict.

RK73H1HTTC1183D_Datasheet PDF

The stage is set for the next slowdown,” said Bill McClean, ananalyst at IC Insights Inc., Scottsdale, Ariz. The downturn portion of an IC industry cycle is usually triggered by global economic recession, IC industry overcapacity, or IC inventory corrections. In 2001, the IC industry will be affected by all three 'triggers.' ”

Even among those executives and analysts who still insist this is a midcycle dip, few are sticking out their necks to predict the exact moment when component suppliers will see relief from their woes.

The timing of [the] recovery is now [the] key issue,” said DrewPeck, an analyst at SG Cowen Securities Corp., Boston. Whileour 2001 outlook has been negative, the erosion is happening even faster than we expected. We expect first-quarter 2001 to be a lot worse.”

RK73H1HTTC1183D_Datasheet PDF

Intel's announcement followed similar statements by other majorchip players, including Cypress Semiconductor, Intersil, LSI Logic, Motorola, and National Semiconductor, who will be unable to meet revenue estimates because of inventory problems and a slowing global economy.

Despite Intel's statement Thursday that its fourth-quarter sales will be flat with the $8.7 billion posted in the preceding quarter, the company's stock bounced up more than 5% at the opening bell Friday, to almost $35 in early morning trading, before closing at $34.

RK73H1HTTC1183D_Datasheet PDF

The Santa Clara, Calif., company's bland statement failed todemonstrate the enormity of the tidal wave that hit the sectorduring the current quarter, analysts said. In fact, Intel's revenue will be short by as much as $600 million, according to SG Cowen's Peck. When combined with Motorola's expected shortfall of about $500 million and unrealized sales announced by other chip makers, the industry could be looking at billions of dollars in lost sales in the current quarter and early 2001.

We were surprised by Intel's pre-announcement, given the factthat our checks had suggested sequential PC growth in the mid-to high single digits,” said Joseph Osha, an analyst at MerrillLynch & Co. Inc., New York. We think inventory levels are aproblem.”

EBN: Hyundai has also said it is diversifying from DRAMs into a larger production portion assigned to foundry work. What's the status of that?Park: More than a third of our fab wafer starts [140,000 out of a total of 350,000 wafer starts a month] are now in our foundry business. We're doing 80,000 wafer starts a month alone for one customer, LSI Logic. Our aim is to have a 50/50 mix in production between foundry orders and our own devices.

EBN: Has the current DRAM price downturn affected Hyundai Semiconductor's capital investment plans?Park: We'll have capital spending of $1.5 billion this year, and will have about $1.3 billion next year, depending on market conditions. This isn't much of a drop. We won't slow down our transition to upgrade all fabs to 0.18-micron processes and move to 0.15-micron as quickly as possible.

EBN: The merger combined LG's different chip manufacturing fabs with different Hyundai fab processes. Are you trying to harmonize these different processes into one common manufacturing system?Park: It's going to take two to three years to consolidate into a single manufacturing platform. Both companies had committed customers for their different types of semiconductors, and we felt obligated to meet these different customer requirements. We see merging the manufacturing operations step-by-step rather than by one big, overall merger of processes. The 0.13-micron generation seems the most appropriate opportunity to have a common manufacturing platform.

EBN: What type of DRAMs do you see taking off in the market next year?Park: We expect to be the leader in double data rate, which should start ramping up quickly next year. We'll produce Direct Rambus DRAM if the price is right and if we find some way to motivate customers. As for next-generation 256-Mbit DRAM, we've been shipping production quantities for the last six months. The price crossover of 256-Mbit DRAMs [two times the price of 128-Mbit] should come in the second half of 2001, and then the market should start switching to 256-Mbit.

Quantum Corp.'s Hard Disk Drive Group today announced that revenues and unit shipments for its third fiscal quarter,ending December 31, 2000, will be lower than previously expected due to problems procuring an unidentified component.


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