Asia Pacific technology, semiconductor sectors outlook negative - ...

Tag : Semiconductor

BEIJING (XFN-ASIA) - Moody's Investors Service said it has a negative rating outlook for AsiaPacific's technology and semiconductor sectors over the next 12-18months due to the decline in prices of memory chips.
'This outlook reflects mainly the pressures apparent onprofitability due to the severer-than-normal downturn in prices fordigital random access memory (DRAM) chips and NAND flash memory,'Moody's (nyse: MCO - news - people ) analyst Ken Chan said in a statement.
'Specifically, profitability for the foundries as well as theoutsourced semiconductor assembly and testing (OSAT) sectors isbeing undermined by lower average selling prices, foreign-exchangevolatility, and higher costs for raw materials and utilities,' hesaid.
Chan added that there is unlikely to be any meaningful recovery forthe industry in the Asia Pacific until well into 2009, givencurrent and projected oversupply and price weakness.
The oversupply problem is being driven as Samsung and LGElectronics continue to expand capacity to win market share,Moody's said.
Also, the macro economic environment is not supportive, whileliquidity is another factor behind the negative outlook, it said,adding that Asia's technology and semiconductor sectors have notyet felt the full brunt of the economic slowdown in the US, Europeand Japan as the weakness in the Korean won has bolstered trade forsome.
'And finally, while many companies have repositioned their exportsto focus on higher-growth Asian and Middle Eastern countries, thebenefits could be limited as sales to such regions tend to involvelow- and ultra-low-priced components,' Moody's said.

will.davies@afxasia.com

-
xfnwd/xfntm

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson FinancialNews Content, including by framing or similar means, is expresslyprohibited without the prior written consent of Thomson FinancialNews.






Neither the Subscriber nor Thomson Financial News warrants thecompleteness or accuracy of the Service or the suitability of theService as a trading aid and neither accepts any liability forlosses howsoever incurred. The content on this site, includingnews, quotes, data and other information, is provided by ThomsonFinancial News and its third party content providers for yourpersonal information only, and neither Thomson Financial News norits third party content providers shall be liable for any errors,inaccuracies or delays in content, or for any actions taken inreliance thereon.