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Philips: No Plans to Stop Chip Production Despite Stockpile

June 21, 1996

AMSTERDAM, Netherlands (AP) _ Philips Electronics NV has a stockpile of semiconductors but has no plans to halt production, the consumer electronics giant said Friday.

The company made its statement in response to newspaper reports that it planned to temporarily stop production at its Nijmegen semiconductor plant in eastern Netherlands, which has been hit by falling demand in recent months for chips used in consumer electronics.

The statement also came at a time when other chip makers are cutting back production.

During the past month, all of the leading Japanese and South Korean companies that make memory chips have said they would either cut existing production or freeze plans to expand production for the rest this year.

Philips has been less affected by the decline in demand for memory chips, since it is only marginally active in this area.

Company spokesman Ben Geerts said that while no production halt is planned, work during the summer may be more focused on equipment maintenance than chip production, partially because of its high chip inventory.

``Everybody knows in this industry that production of semiconductors was more than the demand last year. Of course you adapt production to market developments,″ he added.

Component and semiconductor activities accounted for more than half of Philips’ operating profit last year and for 72 percent of its first-quarter operating profit of 692 million guilders ($404.7 million) this year.

A plan unveiled by Philips in March to invest some 800 million guilders ($467.8 million) to increase the Nijmegen plant’s production capacity will proceed, Geerts said.

The Nijmegen plant is the largest wafer factory in Europe and Philips’ largest wafer plant worldwide.

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