On Friday, Taiwan's second largest microchip maker, United MicroelectronicsCorp, sharply lowered its forecasts for 1998 sales and pre-tax profits.United Micro cut its 1998 pre-tax profit forecast to T$5.442 billion, 49 percent below its original projections. It also cut its 1998 sales forecast by39 per cent to T$18.347 billion.

It gave no explanation for the adjustments, but analysts and local mediasaid the firm was being forced to lower its forecasts because of a sluggishsemiconductor market in the face of Asia's recession.

United Micro was not alone.

As many as 33 companies ranging from high-tech semiconductor makers tolow-end textiles and food manufacturers listed on the main Taiwan StockExchange and over-the-counter market have already rolled back their earlieroptimistic projections, according to a report by the Commercial Times.Among them were two key members of Taiwan's leading industrial conglomerateFormosa group -- Formosa Plastics and Nan Ya Plastics.

Nan Ya Plastics reduced its 1998 pretax profit target by 19 per cent toT$9.37 billion from T$11.58 billion, while Formosa Plastics cut pretaxprofit by 32 per cent to T$3.57 billion from T$5.22 billion.

``Many companies misjudged Taiwan's economic fundamentals,''said Yuan TaSecurities' analyst Huang Kuo-wei.

``They had overestimated their ability to cope with the Asian financialcrisis and underestimated the negative impact of the crisis,'' Huang said.``This is just a beginning. I believe more companies will follow suit,'' headded.

Powerchip Semiconductor Corp had drastically adjusted its bullish pretaxprofit projection of T$436 million to a chilling loss of T$2.395 billion for1998, a downturn of 649 per cent, the Commercial Times said.

About a dozen companies -- including the island's leading computer maker AcerInc -- were expected to lower their forecasts in the near term, it said.Local media said Acer was expected to pare its net profit forecast for 1998to below T$4 billion from T$5.5 billion after an August 28 board meeting.Yuan Ta Securities' Huang said the companies' misjudgement came in part fromthe government's overly upbeat economic forecast.

``The government should take its share of responsibility. It had misled thecompanies and the public by painting a rosy picture for Taiwan's economicoutlook,'' Huang said.

Taiwan has twice revised downward its 1998 gross domestic product forecast,from 6.18 per cent to 6.02 per cent in May and to 5.3 per cent in August.At just 5.3 per cent, the somber new 1998 government forecast would be 1.47percentage points below the 6.77 per cent pace of 1997 and the worst since afive per cent rise in 1985.

The government's chief statistician Wei Duan said he hoped the second halfwould see the worst of Asia's recession pass, with an improving impact onTaiwan's growth starting in the first half of 1999.

The slowdown should bottom out at 4.95 per cent in the third quarter andrebound to 5.21 per cent in the fourth, then rise to 5.75 per cent in thefirst half of 1999, Wei said.

National Securities' analyst Alex Yang concurred with the government's view.``The government might have known about the bad news earlier. What it triesto do is to unfold the bad news bit by bit in order to minimise the shock,''National Securities' analyst Alex Yang said.

``I believe we are almost near the bottom. Things may not get betterovernight, but they can't go much worse,'' Yang said.