Stitch: <Moody lowered Samsung Electronics, Hyundai Motors,...debt to Ba1, a notch above junk bonds>
<Seoul's agreement with the IMF requires the government to cut economic growth and fiscal spending sharply, raise taxes, close banks if necessary, and tighten liquidity.>
infoseek.com:80/Content?arn=a0584LBY247reulb-19971222&qt=samsung&lk=noframes&col=NX&kt=A&ak=news1486
It seems to be difficult for Samsung and Maxtor (Hyundai) to planned fierce expansion of HDD unless they can prove that to be a profitable business. Maxtor seems to buy heads, media and important drive ICs from US companies. Their currency devaluation will make it more expensive for them to buy them. And, these cdomponents constitute a good portion of the HDD cost. This will somewhat offset their capability of lowering HDD price. Besides, who know where they will buy the HDD manufacturing equipment from to expand their growth? From US or Japan? Either way, the cost of start up is going to be higher for them. And, money is becoming more and more difficult to borrow.
Without thinking into this, you would have thought that the currency devaluation will work to their favor 100 percent.
For US HDD makers that manufacture in Singapore, Malaysia, etc, they got the benefit of lower component and labor cost from Asia. Their cost of US components are not changed. You cannot say that Bob Blair of WDC was wrong.
Maybe, there is still life to US HDD makers.
John |
