All: Hynix Begs Other MMs to cut Unprofitable DRAM production
From Korea Times
Hynix Urges Other Chipmakers to Reduce DRAM Production
The CEO of Hynix Semiconductor has openly urged chipmakers to reduce the production of dynamic random access memory (DRAM) to help prices rebound.
In an interview with a leading Internet news service, Dr. Park Chong-sup said that cutting production is the only viable way of pushing up the prices of DRAMs which have hit historical lows.
``Such reduction in production is essential for the health of the semiconductor industry as a whole. Some experts have pointed out that cutting production will have little effect because of the general lack of demand in the market and this is worsening the situation,'' he said.
He told MoneyToday that Hynix has taken the initiative by announcing the closure of the production facility in Eugene, Oregon, for a period of six months and this translates into a production cut of 72 million chips.
``Trying to kill the competition at the cost of incurring losses is not a good business strategy and it will damage the industry as a whole.
Chipmakers need to make the right choice,'' Park said.
Asked about Hynix's current situation, Dr. Park admitted that his company continues to face difficulties, mainly because of the huge drop in DRAM prices.
``We had anticipated that the prices of 64 megabit DRAMs would not fall and this would have helped our normalization but they are averaging no more than $1.10. Since our production costs are $1.40, and when depreciation of our investment is taken into account, things could certainly be better,'' Dr. Park said.
However, he observed that conditions are similarly difficult for other companies, including Samsung Electronics and Micron Technology, and that prices will have to rebound soon.
``I do not anticipate that the market conditions will improve drastically in the third quarter. The earliest time for any significant improvements will be the fourth quarter,'' said Park who spent year as president of Hyundai Electronics America. Hynix was formally called Hyundai Electronics Industries.
Commenting on Hynix's overall financial status, Park said Hynix currently has a cash reserve of some 1.1 trillion won and this is not common even among large Korean companies.
``We have been able to repay debts on time and the 11.4 trillion won in debt at the end of 1999 has been reduced to 8.8 trillion won at the end of last month and this will fall further to 7.9 trillion won at the end of this year,'' said Dr. Park.
He went on to say that because Hynix currently has abundant production capacity, there is no need for large-scale investments and that even a small investment in upgrading its facilities could have strong positive effects.
``We have to be cautious where investments are concerned because of the liquidity situation but the reality is that we can maximize the effects of even limited investments,'' he said.
jakenho@koreatimes.co.kr
ÀԷ½ð£ 2001/07/27 16:15
korealink.co.kr
froland. |
