RMBS on hold indefinitely..HYUNDAI
IC MANUFACTURING
Smaller size,
bigger plans The
quake that shook
the world
FRESH from its merger with LG
Semicon, Hyundai Semi-conductor
Group has been renamed Hyundai Microelectronics and is looking at
spinning off from its parent company.
The divestiture could come as early as the first half of 2000, Hyun-dai
officials say.
It's not necessary to be part of a large company in order to compete in the
DRAM business, according to Hyundai Micro executives. With Hyundai's
manufacturing capability and the sheer number of customers coming from
the merger, the semiconductor unit believes it will be able to sustain growth
without the backing of the parent company.
"Size is nice if you are Godzilla, but the business is now about how efficient
you are and how quickly you can move in the market," says John
Klinestiver, senior vice president and chief administration officer at Hyundai
Microelectronics.
The planned spinoff represents a desire to be profitable. Rather than losing
money year after year, the company wants to be responsible only for its
own financials and not for the overhead of a Korean chaebol. By being
independent, Hyundai Microelectronics will be able to adjust its strategy in
various markets, Klinestiver says. This will enable it to make more
profitable decisions rather than worrying about the concerns or profits of a
larger group, he adds.
"It might put them in a good position to react to market conditions and in
theory, [Samsung Micro] could be a more nimble company in the long run,"
says Jim Feldhan, president of Semico Research, a US market research
firm.
Because of the current memory shortage, now might be the right time for a
spinoff as well because profits will be up and the end markets will be good
next year, Feldhan says.
Hyundai predicts the DRAM market will hit $30 billion by next year. That number is optimistic compared
to estimates from Dataquest, which forecasts the DRAM market in the year 2000 will grow to $26.8
billion. In-Stat predicts the market will come in at $28 billion in 2000.
Farhad Tabrizi, vice president of strategic marketing and product planning for Hyundai's DRAM business
unit, says the company believes PC 133 SDRAM will be the dominant memory next year in PCs and has
put its direct Rambus DRAM plans on hold indefinitely. As a result, Tabrizi says it will produce more
double data rate (DDR) DRAM than Rambus DRAM next year.
Hyundai also is planning to build up its flash and system IC portfolios. The company plans on increasing its
SRAM/flash sales to 8% of its total semiconductor revenue by 2001, up from 2% this year. System ICs
are expected to increase from 5% this year to 15% of chip revenue in 2001. DRAM will remain the big
money maker for the company, but it will command less of the company's over-all business, going from
93% now to 77% of product sales in 2001.
"If they don't expect the DRAM market to grow, they need to find other markets to get into and that is
what they seem to be doing," says Jim Handy, senior analyst at Dataquest.
"Having to deal with the pricing problems of DRAMs over the years, it has been a kind of wake-up call in
terms of how dependent (Hyundai) is in the DRAM business," Feldhan says. "Focusing on system IC, flash
and SRAM will help them diversify and get into numerous emerging markets." |
