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Toshiba Profit Plunges on Microchip Price Slump


Japanese electronics giant Toshiba Corp.'s first-half group profits plunged 40 percent as earnings were battered by a crash in prices of the computer memory chips on which Toshiba relies heavily.

The company said Friday, however, that an improvement in its money-losing household appliance business and higher sales of personal computers in the second half of the business year to next March 31 would limit a slide in full-year profits.

Toshiba said group net profit for April-September -- the first half of the business year -- fell to $147 million from $242 million a year earlier due to a slump in the memory chip market.

Prices of 16-megabit dynamic random-access memory chips (DRAMs), the mainstay chips used in personal computers, have plunged more than 70 percent since early this year amid a supply glut following a global slowdown in PC sales.

``A drop in memory chip prices appears to have halted for the time being, but makers in general have not changed their cautious stance,'' said a Toshiba spokesman.

``We are watching to see how the PC market will do in the first quarter of next year after Christmas sales,'' he said. Toshiba's profit fell despite the weakness in the yen, which the company said boosted group operating profits by $663 million during the six-month period.

A weaker yen makes Japanese products more competitive overseas because it brings down their prices in terms of foreign currency. Among Japan's top five electronics makers, Toshiba is the most susceptible to fluctuations in the yen's exchange rate because it does not own major semiconductor plants abroad and exports most of its memory chips from Japan.

The benefits that its big PC division, which consumes a large amount of memory chips, reaped from lower semiconductor prices also softened the blow from the chip market slump.

Toshiba, the world's largest maker of notebook-type PCs, expects to sell 1.75 million PCs on the global market in the second half of 1996/97, compared with sales of 1.1 million in the first half, the spokesman said.

The company also expects its troubled consumer appliance division to become profitable in the second half.

Toshiba forecast group net profit of 80 billion yen ($707 million) for the full year, which would be


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