Acer boss takes pay cut

The chairman of Acer's manufacturing division, Stan Shih, has requested a pay cut of 30 per cent as a mark of solidarity with his struggling company. Senior executives in Taiwan have joined his mission.

Dataquest analyst, Joe D'Elia, said: "This is nothing more than a token gesture. It will not affect the company's progress. Acer's fortunes won't pick up until some time next year, when there is more demand in the memory chip market," he said.

Analysts agree that semiconductors are going through an era of unprecedented low demand. "It's cyclical: manufacturers built new factories a few years ago, and now there is too great a supply," said D'Elia.

Marinda Jaul, analyst at Frost and Sullivan said: "It's a matter of finding the right balance. The Asian crisis makes things worse, and manufacturers' prices for DRAM chips are at an all-time low."

D'Elia said Acer Semiconductor in particular is suffering from oversupply in the memory chip market. "Texas Instruments was Acer's main customer, but it sold off its memory division to rival, Micron, a few months ago. Acer has been trying to refocus itself as a logic supplier, but it will take time."