June 17, 2024

South Korean Managers Return to Shuttered Plant in North

Sixty factory managers from the South arrived in the Kaesong Industrial Zone, the factory park located in the North Korean border town of the same name, for a day trip to check on their factories idled since the last of them withdrew from there in late April. North Korea halted production there in early April by withdrawing all its 53,000 workers, blaming tensions it said were caused by joint American-South Korean military drills at the time.

The factory managers inspected their manufacturing equipment ahead of the possible resumption of operations. Another batch of South Korean factory mangers planned to make a similar trip to Kaesong on Thursday.

Representatives of the two Korean governments had met on the border over the weekend and agreed upon the factory managers’ trips to Kaesong, but they remained far apart over the terms of reopening the complex. The two sides resumed negotiarltions on Wednesday in Kaesong but again failed to reach a compromise. They planned to meet again on Monday.

Suh Ho, the chief South Korean negotiator, said on Wednesday that North Korea must accept “common sense and international standards” in Kaesong before the complex can be “normalized and further developed.”

South Korea is urging North Korea to take steps to assure that it will not let political and military disputes interfere again with the operation of the joint economic project in Kaesong. Its president, Park Geun-hye, has suggested that one such step would be for North Korea to agree to invite non-Korean factories to Kaesong.

She said in March that “if the Kaesong complex becomes internationalized with foreign factories, North Korea will not be able to do things intolerable under international standards, such as an abrupt travel ban or a sudden tax increase,” actions that she said South Korean firms had suffered there.

Before shutting down Kaesong in April, North Korea had demanded higher wages for its workers and more taxes for South Korean firms there. It also had complained that South Korea’s investments there fell far short of what it had promised when the two Koreas started the joint project a decade ago. But it has opposed inviting foreign investors there, calling such a plan “a criminal plot” to help spread capitalist influence to undermine its socialist political system.

The chief North Korean negotiator, Pak Chol-su, is pressing South Korea to agree to an early resumption of work at the factory complex, citing fears among factory owners that if their plants were not restarted soon, their equipment would soon start deteriorating in the monsoon season.

“It’s raining a lot, and I am worried about the factory facilities,” he was quoted as saying in South Korean pool reports from Kaesong.

During talks on Wednesday, the two Koreas were expected to bicker over the estimated 700 billion won, or about $600 million, in damages that the three-month suspension of operations has caused to 123 South Korean factories in Kaesong.

The South Korean factory managers’ return to Kaesong and the continuing governmental talks were a sign that the two Koreas are easing tensions and edging toward a possible thaw after months of hostile exchanges, which reached a peak when the North threatened to attack the South with nuclear weapons and the South responded with warnings of counterattacks.

The Kaesong complex, where textile and electronic parts companies from the South employed low-cost North Korean workers, started producing goods in late 2004. It is the last remaining toehold for South Korea’s efforts from a previous era to use economic cooperation to help the North open up and move eventually toward the reunification of the peninsula.

But some hard-line conservatives in South Korea have demanded that the government shut the factory park for good. They argue that most of the between $80 million to $90 million paid annually as wages for North Korean workers ended up in the coffers of the North Korean regime, which was building nuclear weapons and running prison gulags.

When it pulled its workers from Kaesong in April, North Korea also blamed United Nations sanctions against its nuclear tests, as well as the joint American-South Korean military drills. It also demanded that South Korea apologize for domestic news media reports that it said insulted its young leader, Kim Jong-un. Those reports quoted commentators as saying that Mr. Kim would not shut Kaesong down because it was an important source of cash for his government.

The move to try to reopen Kaesong is welcome news for some South Korean liberals. They believe that engagement will work better to persuade North Korea to change and give up its nuclear weapons than sanctions and diplomatic pressure.

But Ms. Park’s conservative South Korean government insists that it has no intention of cooperating with the North unless it first changes its provocative behavior. And surveys show that her attitude remains popular among South Koreans after months of bellicose rhetoric from the North.

“We cannot go back to the old ways,” said Kim Hyung-suk, a South Korean government spokesman, about Kaesong.

Article source: http://www.nytimes.com/2013/07/11/world/asia/south-korean-managers-return-to-shuttered-plant-in-north.html?partner=rss&emc=rss

Intel Cuts Outlook on Weak PC Demand; Shares Slump

Intel also said it was scaling back capital spending as a result of the business slowdown. Intel’s stock was down 3.7 percent on Friday afternoon, and shares of ASML Holding NV and other companies that make chip-manufacturing equipment also lost ground.

A revision of Intel targets had been expected by some analysts after PC makers Hewlett Packard Co and Dell Inc warned of slow demand last month, a development that has been compounded by a shaky global economy and consumers shifting toward tablets and smartphones.

But the 8 percent reduction in the top chipmaker’s revenue outlook was much more severe than expected. Intel also withdrew its full-year forecast.

The scaled-back outlook comes just days ahead of a major event where Intel will tout a new generation of processors that consume less power, central to its strategy of reinvigorating a stagnant PC industry.

Bernstein analyst Stacy Rasgon said the size of the Intel cut was surprising. Weakness in PC sales to businesses and governments, known as enterprise sales, cited by Intel also raised concerns.

“In the last six to eight quarters, consumers have been weak but the enterprise was strong. Now the enterprise is weak,” Rasgon said.


Intel’s warning comes at a time when PC makers should be gearing up to build more computers than usual ahead of the launch of Microsoft Corp’s Windows Phone 8 operating system.

Intel has been banking on the Windows 8 release in October to help slow the trend of consumers buying smartphones and tablets instead of PCs.

Devices running Windows 8 and powered by Intel’s latest components will be a major draw when thousands of technology professionals descend on the annual Intel Developer Forum in San Francisco next week.

While a Windows release normally boosts computer sales, analysts believe it might not help as much this time.

At the forum, Intel is expected to show off a range of Ultrabook laptops powered by recently launched Ivy Bridge processors, as well as hybrid devices with screens that detach from keyboards to be used as tablets.

Along with concerns about consumer demand being hurt by the weak economy, manufacturers are reluctant to commit their resources until they have a better idea of which kinds of new devices will become hits with consumers.

“You’re trying to decide are people going to buy … a tablet that slots into a keyboard, or are they going buy traditional notebooks or ultrabooks?” said MKM Partners analyst Daniel Berenbaum.

“In the absence of knowing what to sell, there’s a clear reluctance to build any sort of further inventory.”


Intel’s next-generation PC processor, code-named Haswell, will also be front-and-center at the forum, with executives talking up improved power performance that will let future laptops stay on longer without needing a recharge.

Haswell, due to appear in a crop of laptops released for next year’s holiday season, will improve on computing and graphics features and is targeted to reduce electricity consumption from 17 watts to 10 watts, according to Intel.

Intel said it now expects third-quarter revenue of $13.2 billion, plus or minus $300 million, down from its previous forecast of $13.8 billion to $14.8 billion.

Analysts on average expected $14.2 billion. The company is due to report third-quarter results in October.

Intel processors are used in 80 percent of the world’s PCs, but the Santa Clara, California, company has been slow to adapt chips for smartphones and tablets and now trails Qualcomm Inc and Samsung Electronics Co Ltd, which design their chips using power-efficient technology licensed from ARM Holdings Plc.

Intel’s new Medfield processor, showcased in phones launched this year in Russia, India and the United Kingdom, surprised some critics who believed the chips would consume too much power.

Motorola Mobility, owned by Google Inc, is expected to unveil an Intel-based smartphone in London on September 18, the first of a multi-device agreement with the chipmaker.

“They have a respectable seat at the (mobile) table because they surprised a lot of people with Medfield and just how well that did perform,” said Patrick Moorhead of Moor Insights Strategy. “Their big chance to get more credibility will come with Motorola.”

The company said on Friday that full-year capital spending is expected to fall short of its previous forecast of $12.1 billion to $12.9 billion.

It expects gross margin of 62 percent for the third quarter, plus or minus 1 percentage point, down from its previous expectation of 63 percent, plus or minus a couple of percentage points.

Intel shares were down 3.7 percent at $24.16 on Friday afternoon. AMD was off 4.9 percent at $3.48. PC graphics chipmaker Nvidia Corp was down 1.9 percent at $13.47.

ASML’s Nasdaq-traded shares were down 1.7 percent at $56.88, and stock of chip gear maker Applied Materials Inc was down 0.7 percent at $11.83.

(Reporting by Sayantani Ghosh in Bangalore, Sinead Carew and Nicola Leske in New York; editing by Saumyadeb Chakrabarty, John Wallace and Matthew Lewis)

Article source: http://www.nytimes.com/reuters/2012/09/07/technology/07reuters-intel-outlook.html?partner=rss&emc=rss