Hitachi Ltd, the largest of Japan's major chipmakers not to cut production this year, may close some plants because earnings from semiconductors are sagging on falling prices and reduced demand, investors said.
Prices for dynamic random access memory chips, the main memory in personal computers, have plunged below the cost of production for makers such as Boise, Idaho-based Micron Technology Inc because of slowing demand.
Hitachi rival Toshiba Corp, the second-biggest chipmaker, yesterday said it will cut production of computer memory chips by almost a quarter. NEC Corp, the third-biggest chipmaker, said July 31 that it will cut 4,000 jobs in its semiconductor operations and stop memory-chip production altogether within three years.
"Hitachi will probably announce similar moves sometime soon," said Norio Suzuki, who helps manage US$70 billion in assets at Axa Investment Managers. "Japanese makers spend too much money to produce chips."
Axa holds shares of Hitachi and its rivals NEC Corp, Fujitsu Ltd and Mitsubishi Electric Corp.
Other Japanese chipmakers, such as Mitsubishi Electric Corp, will probably be forced to follow Toshiba in making production cuts in Japan to remain competitive, said Nobuaki Murayama, who oversees ?60 billion in Japanese equities at Cigna International Investment Advisors KK.
"They don't have to be major producers of DRAMs and flash memory themselves, as they can consign production to overseas makers to cut costs,'' Murayama said.
The company said operating profit for its fiscal first half should be on target because of solid sales of data-storage equipment.
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