Japanese memory makers are putting their weight behind the production cuts initiated last week by their South Korean counterparts.
Mitsubishi Electric said it will reduce capital expenditure in a bid to prevent its production of DRam memory chips falling below the price it wants to achieve. Hitachi and Toshiba have announced that they will consider cutting semiconductor capital spending plans in 1997.
This follows a unilateral decision by the South Korean government to restrict export licences to the three major memory-chip-making conglomerates in order to cut production and push up prices ? DRam prices fell 80 per cent in 1996. South Korean companies account for 35 per cent of the world?s DRam production.
The memory makers? moves have caused chaos in the memory spot markets, forcing prices up 35 per cent in a single week. But the rises are likely to reflect profiteering by chip-brokers because there is still plenty of surplus manufacturing capacity.
Taiwanese companies are expected to follow along with all the tiger economies in the Far East, as new pricing agreements on memory loom this March.
Analysts have accused Far Eastern vendors of operating in league with each other over the planned production cuts. But all the companies deny acting in a cartel. Most DRams are made in the Far East, but German company Siemens and a couple of US manufacturers also produce memory.
The issue is likely to provoke questions in the European parliament as ministers and MPs question whether a cartel is likely to arise from the reference price agreement, which is due to be finalised in two months? time.
Market analysts say the memory producers are unlikely to succeed in forcing prices up long-term. Dataquest forecasts DRam prices will drop 20 to 30 per cent in 1997.
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