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NEC cranks up memory chip output

The firm will increase monthly DRAM chip production 150 percent to 30 million units, according to a report.

Japan's NEC will boost memory chip production dramatically, a newspaper reports, as memory prices continue to fall.

NEC will increase monthly DRAM chip production 150 percent to 30 million units, according to the Nihon Keizai Shimbun, a major Japanese business daily, citing company sources.

NEC will make more of the 64-megabit variety of chips, which are now coming into vogue. These are displacing the older, lower-capacity 16-megabit chips. 64-megabit memory packs four times as much data into essentially the same silicon real estate allowing PC makers to offer computers with much greater memory capacity.

Generally, when memory chip manufacturers increase output, prices fall, making memory, a major component in PCs, cheaper.

The company will augment production at a facility in the United Kingdom from this fall, raising monthly output from the current level of 4 million to 15 million units by the summer of 2000, the newspaper said.

NEC will also expand production at plants in Japan to about 10 million units per month. NEC is also boosting production of 128-megabit capacity chips.

The move by NEC comes as prices have begun to drop again after a brief period of price stability. The price of 64-megabit DRAMs has fallen to record lows this month as part of a trend which began in March. This was preceded by a period of relative stability which some manufacturers say began in November of last year, while others say in late summer.

Most makers have begun increasing output including Micron, one of the largest manufacturers, and Korean companies such as Samsung, last year the largest maker in the world.

The Taiwanese are also adding production as new plants come on line and Infineon Technologies AG is having on impact on the market too as it turns on new capacity. Infineon is the former Siemens AG semiconductor group.

Typically, memory chipmakers pare back production and, as a result, prices eventually creep back up as new high-end PCs are introduced with increased memory capacity to handle more demanding software and tasks such as multimedia. But more worldwide capacity has stepped up to meet demand.

GartnerGroup Dataquest said that in the summer of last year, manufacturer's were selling well below cost but this improved by the end of the year. The market, for most manufacturers, had been relatively stable from late last summer through March, when prices began to decline again.

Some analysts, on the other hand, see growth of about 50 percent in the DRAM market later this year and claim that manufacturers of cutting-edge chips, such as Rambus DRAM, will do well.

The newspaper report said that Japanese semiconductor makers such as NEC had been cutting back on investment because of price decline but are now reacting to production hikes by rivals. 36265