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September 22, 1998

MORE BAD NEWS AT MATSUSHITA, OKI DUE TO CHIP SLUMP

By CBR Staff Writer

Matsushita Electronics Corp and Oki Electric Industry have disclosed more bad news related to the slump in the world market for memory chips. Matsushita has decided to postpone the start-up of operation at two semiconductor plants, according to The Nihon Keizai Shimbun. The company also plans to cut annual capital spending from 100 ($738m) billion yen to 60 billion for the next four years. Matsushita will hold off on the production of 32-bit microcontrollers and 64Mb DRAMs at one plant until next year and will also postpone construction of a plant for 0.18 micron chip production until 2000. This news follows the company’s recent decision to close down chip-making operations at its US subsidiary (CI No 3,492). Meanwhile, Oki says memory price declines will lead to a loss for the current fiscal year of 43bn yen ($317m) – the largest it’s ever reported – on disappointing sales of 735bn yen ($5.42bn). An earlier projection by the company had called for a profit of in the neighborhood of 1bn yen. The lion’s share of the loss, roughly 35bn yen, is directly attributable to the ailing DRAM business. Oki has also announced a restructuring plan that will see the company cut 1,500 staff by March 2001, including 500 job cuts in the chip-making operations by March 2000. A further 1,200 will go at affiliated companies over that span of time and Oki says it plans to accomplish the bulk of the cuts through attrition. The company will also shift its focus away from DRAMs to concentrate on higher-margin multi- function chips and cut capital spending in chip operations by about 20% next year. Figures converted at 135.5 yen to the dollar.

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