SEOUL (Reuters) - Asian chipmakers are set to cash in on a major realignment in the volatile industry which is tilting the power balance their way at the expense of gadget makers such as Apple Inc, after years of cautious investment kept supply in check.

Manufacturers including Toshiba Corp and SK Hynix are poised to reap the rewards of soaring demand for cut-price tablets and smartphones in China, the world's biggest smartphone market, and the emergence of Chinese mobile device makers such as Huawei Technologies Co Ltd.

At the high end of the spectrum, demand for gadgets armed with ever greater memory capacity will fuel chip sales even if the market for relatively expensive handsets does not see the kind of rapid growth it has in the past.

All of this, combined with reduced investment since 2011, means the prices of dynamic random access memory (DRAM) and NAND memory chips have started to rise, and chipmakers are enjoying the most bargaining power they have had in years.

"Chipmakers are reaping the benefits of curtailed investment of recent years just when demand is exploding," said Hong Sung-ho, an analyst at I'M Investment & Securities.

Chipmakers had little bargaining power until early last year as Apple and Samsung were the sole major buyers of NAND chips used in mobile devices. The two global heavyweights, which focus on the high-end market, are now struggling with slowing growth as this most profitable segment nears saturation.

CHINA IN DRIVING SEAT

China is driving the industry's rapid shift to cheaper smartphones, helping chipmakers broaden their customer base from Apple and Samsung Electronics Co Ltd.

The growth of Chinese smartphone makers such as Huawei, ZTE Corp and Lenovo Group Ltd is threatening to weaken the dominance of Apple and Samsung, playing into the chipmakers' hands.

Some 70 percent of China's smartphone shipments are sold at 1,000 yuan ($160) or less, while 10 percent are in the 1,000-3,000 yuan range. Super-cheap tablets costing less than $100 are also soaking up supply.

"Despite weakening demand from Apple, NAND prices have... firmed up, largely thanks to strong demand growth from China," said HMC Investment & Securities analyst Greg Nho.

"The size of the Apple order was a big price-swing factor, but now demand from Chinese manufacturers is more than offsetting this volatility."

Prices of DRAM chips, mainly used in computers, have leapt nearly 90 percent so far this year even as PC sales have plummeted, while the market for NAND memory chips has tightened.

Outside of China, demand for NAND chips is increasing as consumers need more memory capacity to play high-quality video and music on up-market gadgets.

"In the old days, we only took a few photographs. Now we take videos as well, at potentially higher resolutions," said Damian Thong, director of research at Macquarie Capital Securities in Tokyo.

"I actually think the opportunity for NAND flash is enormous, still, and very untapped."

HTC Corp's flagship smartphone HTC One, for example, has NAND memory capacity of 64 gigabytes, four times bigger than that of most other high-end models.

"Nowadays, consumers want more feature-packed smartphones and we'll have to make sure we can produce these gadgets at affordable prices to compete in the market," said an executive from ZTE, who declined to be identified as he was not authorized to speak to the media.

EXPANSION AGAIN

No.2 NAND manufacturer Toshiba said on Tuesday it would expand a production facility in Japan with an investment of nearly 30 billion yen ($300 million). Samsung - the world's leading producer - is building a $7 billion NAND plant in China.

Micron Technology Inc, which is looking to complete the acquisition of bankrupt Japanese chipmaker Elpida Memory Inc before the end of August, plans to increase investment in 2014 as it integrates with the Japanese firm.

But even as some chipmakers boost investment for the first time in years, few believe the market is heading for a glut. Indeed, memory chipmakers' total capital spending this year is set to decrease by 2.6 percent to $12.3 billion, according to HMC Investment & Securities.

Most manufacturers are keeping investment to a small scale as they prepare for the arrival of three-dimensional chip engineering, a major technological leap from the current planar structure.

Macquarie's Damian Thong said demand for NAND chips would continue to outstrip supply, even with the new production facilities in the pipeline.

"Memory prices and memory profitability will remain high for the next 12 months," he said.

Samsung, which had been one of the most aggressive chip investors, has become conservative in recent years, a departure from its traditional approach of keeping rivals at bay by not allowing profitability to get too high.

"By creating an oversupply situation, Samsung was able to keep memory competitors weak," Bernstein analyst Mark Newman said in a report on Tuesday.

"Today, however, that strategy of lower memory chip prices actually just helps Samsung's handset and tablet competitors. Samsung is thus becoming highly motivated to generate memory shortages and high memory pricing."

Samsung is the world's top NAND chip maker with around 38 percent of the market, followed by Toshiba, which has a 28 percent share and SK Hynix with 13 percent.

(Additional reporting by Sophie Knight in TOKYO and Chyen Yee Lee in HONG KONG; Editing by Stephen Coates)

"Without an agreement on our presence in Afghanistan, we would not remain. But we do not believe that that's the likely outcome of these negotiations," James Dobbins, the State Department's special envoy for Afghanistan and Pakistan, told a Senate hearing.

"Unlike Iraq, to which comparisons are often made, the Afghans actually need us to stay. Most Afghans want us to stay. And we have promised to stay."

(Reporting by Phil Stewart; Editing by Vicki Allen)

Acting IRS head Danny Werfel told workers in an email that he is canceling the bonuses because of automatic spending cuts enacted this year. The agency was scheduled to spend nearly $98 million on employee bonuses this year $76 million for union workers; $19.3 million for nonunion workers, including managers; and $2.5 million for executives.

The bonuses, which were made public in June, riled members of Congress who were already scrutinizing the IRS for improperly targeting conservative political groups when they applied for tax-exempt status.

Werfel, however, did not mention the controversy in his message to employees.

"Given the unprecedented budget situation and consistent with government-wide policy, I do not believe there should be performance awards this year for IRS employees, managers or executives," Werfel said in a statement. "Previously, the IRS determined that, consistent with government-wide guidance, non-bargaining unit employees and managers would not receive awards. I have now instructed our senior leadership team to determine options we can take to eliminate awards for bargaining unit and senior executives as well."

The National Treasury Employees Union said it believes the bonuses are legally required under its collective bargaining agreement

The agreement calls for the IRS to set aside 1.75 percent of union salaries for bonuses, but there is a clause that could enable the IRS to renegotiate. The vast majority of bonuses are based on performance, according to the contract. The agency has more than 90,000 employees.

"NTEU has had a negotiated performance awards program at the IRS for decades, pursuant to the law and regulations which specifically direct agencies to implement such merit-based incentive programs," the union's president, Colleen M. Kelley, said in a statement. "It is NTEU's position that the awards are legally required as part of the collective bargaining agreement between NTEU and the IRS. NTEU is in bargaining with the IRS over this issue and intends to fully pursue the bargaining process to the end."

The IRS has been under intense scrutiny since the agency revealed in May that agents had improperly scrutinized tea party and other conservative political groups. Since then, the IRS has shared documents with Congress that show some liberal groups may have been targeted as well.

The agency has also been criticized for lavish spending on employee conferences and the potential employee bonuses.

Werfel, however, said, "This is not a reflection of the quality or performance of the work done by the IRS workforce, but rather an unfortunate byproduct of the difficult budgetary situation we find ourselves in."

A House Republican spending bill would cut IRS funding by 24 percent for the budget year that starts Oct. 1. It would also prohibit funding for employee bonuses and awards until the bonus program is reviewed.

"An acknowledgement that all bonuses might be inappropriate is welcome," said Sen. Chuck Grassley, R-Iowa, who first publicized the potential for employee bonuses at the agency.

"But it shouldn't take a media firestorm and congressional outrage for the IRS to act within its budgetary constraints," Grassley said. "The IRS still could give bonuses to union members and senior executives, according to today's announcement. Rejecting the White House's mandate to stop bonuses across the board would be a slap in the face to taxpayers."

In April, the White House budget office ordered agencies to cancel discretionary bonuses because of automatic spending cuts. The directive was written by Werfel, a former budget official who has since been appointed as acting head of the IRS.

If the IRS is successful in canceling union bonuses, the agency will also cancel two scheduled furlough days for workers, Werfel said.

Earlier this year, the agency announced five furlough days in which the entire agency shuts down because of budget cuts. The agency has already imposed three furlough days.

Kelley, the union president, said the IRS doesn't need to cancel bonuses to cancel the furlough days.

"The IRS should examine all parts of its budget and operations before eliminating incentive awards for high-performing frontline employees," Kelley said. "IRS employees are dedicated and hard-working professionals who perform important and difficult work for our country. Employees have already earned these awards. The awards that are due are based on employee performance evaluations for work already performed beginning in 2012."

___

Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

During a brief arraignment hearing in federal court, Ward stood quietly as his attorney announced the plea. U.S. Magistrate Judge Wallace Capel Jr. set a July 22 trial date for Ward.

An FBI investigation resulted in a grand jury indicting Ward. He was arrested Monday on charges of bribery related to a sports contest and conspiracy counts that accuse him of trying to fix the point spread in Auburn's Southeastern Conference game against Arkansas on Jan. 25, 2012. Ward came off the bench in that game but crumpled to the floor after playing only 19 seconds with an apparent leg injury. Arkansas won 56-53.

Ward was suspended before a Feb. 25, 2012, game, also against Arkansas, and didn't play for the Tigers again.

Ward, a 6'2" guard, averaged nine points per and started 17 games in his only season at Auburn. He'd played two seasons for Texas before transferring to Auburn.

Federal prosecutors are accusing Ward of attempting to recruit other Auburn players to help fix the game and offering to pay other players for their help.

One of Ward's attorneys, Everett Wess of Birmingham, said the indictment is unusual because a conspiracy involves two or more people, but the indictment names no one else. Wess said he has not yet seen the prosecution's evidence and doesn't know if there is a cooperating witness.

"We plan to talk to coaches, teammates and friends and learn as much as we can about this case," he said.

Ward, who is free on bond, made no statements in court or to the news media as he left the courthouse. He wore a dark blue shirt and blue striped tie to the hearing, but neither was the shade of Auburn blue.

Ward is no longer attending Auburn. He is living in his hometown of Montgomery and looking at other schools, with the hope of returning to basketball, but he is not working, defense attorney Reginald McDaniel said.

If convicted, Ward faces up to five years in prison and a fine of up to $250,000.

U.S. Attorney George Beck said Tuesday that Auburn University officials cooperated fully with the investigation, and Auburn issued a statement saying it notified the FBI, NCAA, and SEC immediately after learning of the matter last year.

KOAT-TV reports (http://bit.ly/19rx1eR ) that "Tapia" is scheduled to be shown Saturday at the Los Angeles Film Festival and will feature some of the late boxer's final interviews.

His widow, Teresa Tapia, says there is a lot of emotion in the documentary.

Boxing promoter Lou DiBella and hip-hop artist 50 Cent have acquired the rights to the film. Eddie Alcazar, director of "Tapia," says 50 Cent will help reach a broader audience and that the rapper is on board with keeping the film as it was created.

Tapia died last year at his Albuquerque home. His turbulent boxing career was marked by cocaine addiction, depression and run-ins with the law.

TOKYO (Reuters) - The Bank of Japan said an economic recovery was underway as it kept monetary policy steady on Thursday, its most optimistic view in two-and-half years reflecting the positive impact of a weakening yen and its massive monetary stimulus on activity.

The central bank made no major changes to its forecast that consumer inflation will accelerate in the coming years to near 2 percent in the business year ending March 2016, a key target for Prime Minister Shinzo Abe's drive to reflate the economy.

As widely expected, the BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion to 70 trillion yen ($600 billion-$700 billion).

"Japan's economy is starting to recover moderately," the central bank said in a statement after its two-day meeting, revising up its assessment for the seventh straight month.

The last time the BOJ used the word "recover" to describe the economy was in January 2011, two months before the March 11 earthquake and tsunami that devastated the country.

Many central bank officials are encouraged by bright signs in the economy as the yen's fall to multi-year lows supports exports and the feel-good mood generated by Abe's reflationary strategy bolsters consumer spending and business confidence.

The BOJ said capital expenditure had stopped weakening and was showing some signs of picking up, and also upgraded its view on factory output to say it was "increasing moderately".

Data on Thursday supported that view, with core machinery orders, a leading indicator of capital expenditure, rising a bigger-than-expected 10.5 percent in May.

The BOJ's optimism suggests it will probably hold off on any additional stimulus at least until late October, when it overhauls its economic and price projections, analysts said.

"There's no material change to the BOJ's forecasts from April. Basically, the economy is recovering in line with its main scenario," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.

GRAPHIC: Japan core inflation and CGPI

http://link.reuters.com/vef36s

GRAPHIC: Core inflation and BOJ policy rate

http://link.reuters.com/dud47s

GRAPHIC: Japan inflation target

http://link.reuters.com/nux65t

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

AMBITIOUS TARGET

Financial markets have recently sold off on concerns that the U.S. Federal Reserve may begin to scale back its $85 billion a month bond-buying program as soon as September.

That timetable was thrown into question after Fed Chairman Ben Bernanke said on Wednesday that highly accommodative policy would be needed for the foreseeable future.

The market volatility appears to have had little impact so far on Japan's economy, which emerged from a recession late last year to grow an annualized 4.1 percent in the March quarter.

On Tuesday, the International Monetary Fund raised its growth forecast for Japan to 2 percent this year on the back of the BOJ's stimulus, its strongest forecast for a G7 nation.

The BOJ board slightly cut its median forecast for core consumer inflation to 0.6 percent for the current business year to March 2014 from a 0.7 percent forecast in April, likely due to the impact of falling commodity prices.

It also tweaked its core consumer inflation projection for the following year to 1.3 percent from 1.4 percent, but kept its estimate for fiscal 2015/16 unchanged at 1.9 percent.

The projection remains far more ambitious than private-sector forecasts around 1 percent, a sign many analysts doubt there can be a quick exit from 15 years of deflation.

Yamamoto of Mizuho Research said the BOJ's price forecasts are too optimistic given concerns that demand could drop after an expected sales tax hike in Japan next April.

"The BOJ could move again early next year as downside risks to its price target are likely to become more clear," he said.

($1 = 100.1050 Japanese yen)

(Additional reporting by Kaori Kaneko; Editing by John Mair)

Along with 20 bodies found, that would put the death toll from Saturday's derailment and explosions in this lakeside town at 50.

Hours before that somber meeting, the head of the U.S. railway company whose train crashed made his first visit to Lac-Megantic since the disaster, amid jeers from residents and criticism from politicians, including the Quebec premier.

The rail chief blamed the engineer for failing to set the brakes properly before the Montreal, Maine & Atlantic Railway train hurtled down a seven-mile (11-kilometer) incline, derailed and ignited. All but one of the 73 cars was carrying oil, and at least five exploded.

Edward Burkhardt, president and CEO of parent company Rail World Inc., said the engineer had been suspended without pay and was under "police control."

Parts of the devastated town had remained too hot and dangerous to enter and find bodies days after the disaster. Some 60 people had been presumed missing earlier.

"Now we are standing here with a number of 50 persons that we are considering most probably dead in this tragedy," said Quebec police inspector Michel Forget, who came to an afternoon news briefing from a meeting with families of the dead and missing.

"We informed them of the potential loss of their loved ones," Forget said. "You have to understand that it's a very emotional moment, and our thoughts are with these families."

Only one of the bodies found so far has been formally identified, said Genevieve Guilbault of the coroner's office. She did not release the name but said next of kin had been notified.

She described efforts to identify the other remains as "very long and arduous work" a consequence of the fire's intensity.

Another police official, Sgt. Benoit Richard, said investigators had spoken with Burkhardt during his visit. He did not elaborate.

Until Wednesday, the railway company had defended its employees' actions, but that changed abruptly as Burkhardt singled out the engineer as culpable.

"We think he applied some hand brakes, but the question is, did he apply enough of them?" Burkhardt said. "He said he applied 11 hand brakes. We think that's not true. Initially we believed him, but now we don't."

Burkhardt did not name the engineer, though the company had previously identified the employee as Tom Harding of Quebec. Harding has not spoken publicly since the crash.

"He's not in jail, but police have talked about prosecuting him," Burkhardt said. "I understand exactly why the police are considering criminal charges ... If that's the case, let the chips fall where they may."

Quebec police have said they were pursuing a wide-ranging criminal investigation, extending to the possibilities of criminal negligence and some sort of tampering with the train before the crash. The heart of the town's central business district is being treated as a crime scene and remained cordoned off by police tape Wednesday.

At a news conference shortly before Burkhardt's arrival, Quebec Premier Pauline Marois faulted his company's response.

"We have realized there are serious gaps from the railway company from not having been there and not communicating with the public," Marois said. She depicted Burkhardt's attitude as "deplorable" and "unacceptable."

Burkhardt, who arrived in town with a police escort, said he had delayed his visit in order to deal with the crisis from his office in Chicago, saying he was better able to communicate from there with insurers and officials in different places.

"I understand the extreme anger," he said. "We owe an abject apology to the people in this town."

In an exchange with reporters, Burkhardt defended the practice of leaving trains unmanned, as was the case when the train rolled away. Canadian transportation department officials have said there are no regulations against it.

"For the future we, and I think probably the rest of the industry, aren't going to be leaving these trains unmanned," Burkhardt said. "We'll take the lead with that. I think the rest of the industry is going to follow."

Among the residents looking on as Burkhardt spoke was Raymond Lafontaine, who is believed to have lost a son, two daughters-in-law and an employee in the disaster.

"That man, I feel pity for him," Lafontaine said. "Maybe some who know him properly may think he's the greatest guy in the world, but with his actions, the wait that took place, it doesn't look good."

The disaster forced about 2,000 of the town's 6,000 residents from their homes, but most have been allowed to return.

___

Associated Press writers Sean Farrell in Lac-Megantic and Charmaine Noronha in Toronto contributed to this report.

Launched in March 2009, NASA's has detected more than 3,000 potential alien planets. But that exoplanet hunt stalled in mid-May of this year, when the second of Kepler's four orientation-maintaining reaction wheels failed, hobbling the spacecraft.

Since then, the Kepler team has been working on possible fixes for the reaction wheels and plans to try them out out in the coming weeks, officials said. []

ALMATY, Kazakhstan (Reuters) - A Russian rocket carrying three navigation satellites worth around $200 million crashed shortly after lift-off from the Russian-leased Baikonur launch facility in Kazakhstan on Tuesday after its engines suddenly switched off.

The accident led to a large spill of heptyl, a highly toxic rocket propellant, but there were no reports of casualties or of any immediate threat to nearby settlements.

State-run Rossiya-24 television showed footage of the Proton-M booster rocket veering off course seconds after take-off. It flew horizontally and began to come apart in flames, crashing in a ball of fire near the launch pad.

Russian Prime Minster Dmitry Medvedev, who has said that Russia has lost 10 satellites in seven failed launches in just over one year, ordered tighter controls put in place to avoid more embarrassing mishaps, his spokeswoman told Interfax.

The crash, which echoes the costly loss of three navigation satellites in 2010, will further damage the reputation of Russia's once-pioneering space program, cause delays in launches and threaten its hold on some 40 percent of the market for space launches.

Russia's space agency Roscosmos said the accident had been caused by the emergency switch-off of the rocket's engines 17 seconds into the flight. The shutdown could have been caused by a problem with the engine or the guidance system, the state-run RIA news agency reported.

The rocket contained 172 tonnes (1 tonne=1.102 tons) of highly toxic heptyl propellant, Kazakh Emergencies Minister Vladimir Bozhko told an emergency government meeting.

Talgat Musabayev, head of Kazakhstan's space agency Kazcosmos, said nitric oxide - a product of burning heptyl - was much less toxic for humans. He said it was raining in the area, so toxic clouds would probably not reach the town of Baikonur some 60 km (38 miles) away.

However, the authorities instructed locals to stay at home and not to open windows, and ordered to close shops and public catering, said Kazakh Interior Minister Kalmukhambet Kasymov.

The estimated loss from the three satellites, meant for the trouble Glonass satellite navigation system, was about $200 million, Rossiya-24 reported.

Russia plans to spend more than 300 billion roubles ($9.1 billion) by 2020 on Glonass, its answer to the U.S. Global Positioning System (GPS) system.

The system, first conceived by the Soviet Union more than 40 years ago, has been plagued by failed launches, including one in 2010 in which three satellites were also lost, and by suspicions of corruption and embezzlement. Its chief designer was dismissed last year during a fraud investigation.

Russia's workhorse Proton rocket, known at the time under its UR-500 code, made its first test flights in the mid-1960s.

It was originally designed as an intercontinental ballistic missile to carry a nuclear warhead targeting the Soviet Union's Cold War foe the United States. But it was never deployed as a nuclear weapon.

Several crashes of Proton rockets accompanied by spills of heptyl have led to temporary strains in relations between Russia and Kazakhstan.

Russia is increasing spending on space and plans to send a probe to the moon in 2015, but the pioneering program that put the first man in space in 1961 has been plagued in recent years by setbacks, including botched satellite launches and a failed attempt to send a probe to a moon of Mars. ($1 = 32.9557 Russian roubles)

(Additional reporting by Alissa de Carbonnel and Steve Gutterman in Moscow and Raushan Nurshayeva in Asatana; Writing by Dmitry Solovyov; Editing by Jon Boyle)

O'Bannon and his lawyers asked a federal court judge to turn their antitrust lawsuit into a class action, representing thousands of former and current college athletes. The lawsuit demands that the NCAA find a way to cut players in on the billions of dollars earned by college sports from live broadcasts, memorabilia sales, video games and in other areas.

U.S. District Court Judge Claudia Wilken didn't rule on either the merits of O'Bannon's case or his demands to turn the case into a class action. It could take weeks, even months, before Wilken rules.

Instead, she ordered O'Bannon's lawyers to revise the lawsuit to fix some legal technicalities, including explicating adding current players to the lawsuit. Lawyer Michael Hausfeld said he will file a new lawsuit that includes current players, but will seek to keep their names confidential.

"They are afraid of retaliation," Hausfeld told the court.

NCAA lawyer Greg Curtner is against certifying the lawsuit as a class action, arguing that the claims of thousands of collegiate athletes are too different to be treated the same. For instance, certain athletes bring in more revenue than others and have different legal claims at stake.

The NCAA argues that many of the athletes receive scholarships in exchange for playing sports and to pay student athletes would ruin amateur athletics. To pay athletes more than that would ruin collegiate sports, the NCAA argues.

The debate over compensating college players is almost as old as the NCAA, founded in 1906. Amateurs have been expected to compete for free and the love of sport or at least the cost of a scholarship and the pursuit of an education.

The NCAA is steadfast in its position that student-athletes are prohibited from receiving payment for participating in sports. It also says it has done nothing wrong in marketing itself for the benefit of its member schools and will continue to vigorously contest the lawsuits

But the NCAA's revenues have skyrocketed in recent years it recently signed a $10.8 billion, 14-year television deal for basketball and so have the demands of athletes to share in the money.

"I'm doing this for change," O'Bannon said outside court.

The star of the NCAA 1995 basketball champion UCLA Bruins traveled from his Las Vegas home to attend the hearing Thursday.

He said he first became aware that others were profiting from his image in 1995, when he visited a friend's house and was shown an avatar resembling O'Bannon playing for the 1995 Bruins in the game. Two years later, he filed a lawsuit that focused attention from lawmakers, college administrators and others on just how much money the NCAA and its member schools earn each year.

The schools argue that money-making sports like football and baseball help support sports such as volleyball and gymnastics with smaller fan bases.

That may be, O'Bannon said, but he still thinks student athletes who help generate the revenues are entitled to a cut.

"I believe the kids coming through the system can do better than I did," he said. "I never thought this lawsuit would get this big, but now that it has, I hope it forces big changes."