LG and Hyundai merge their chipmaking units. DUV plays a role. I cannot tell if this means that the combined entity will buy more DUV equipment, or if the merger will delay the existing need for the LG fabs to buy DUV equipment.......
semibiznews.com
A service of Semiconductor Business News, CMP Media Inc.
Story posted at 9:30 a.m. EDT/6:30 a.m. PDT, 9/3/98
Hyundai, LG Semicon agree to merge their
semiconductor operations
By Jack Robertson
WASHINGTON -- Korean semiconductor giants Hyundai Electronics Co.
and LG Semicon Co. have agreed in principle to combine their
semiconductor operations into a new, single company. A Hyundai
spokesman told Semiconductor Business News that the chip agreement
had been signed, but said the two firms remained sharply divided over
control of the new chip entity.
The Hyundai-LG semiconductor combine was part of a massive swap of
chaebol subsidiaries in aeropace, petrochemical, railroad rolling stock, and
power generation. It was the only semiconductor industry exchange as part
of the much-heralded "big deal" swaps concluded under heavy government
pressure.
The new Korean chip firm would combine LG Semicon's estimated 6.7% of
the global DRAM market and Hyundai's 9% share to become a
neck-and-neck competitor with Micron Technology Inc., now that the U.S.
firm has absorbed Texas Instruments Inc.'s DRAM fabs. It was too soon to
get early industry reaction, although analysts previously have said that simply
gaining larger economies of scale in the DRAM market isn't an immediate
advantage when memory chips are still selling at a loss.
Observers will also be looking closely to see how any joint company will
handle the massive debts of the two chip makers. Each firm was struggling to
cope with huge outstanding loans. Combining the mountainous debt could be
an awesome burden for any single new firm.
Both chip operations have run up steep losses. LG Semicon reported a
$188 million loss for the first six months, ended June 30, 1998. Hyundai
Electronics Industries Co., which includes a range of electronic groups
besides semiconductors, reported a $250 million loss in the first half of this
year. Huge chip losses were blamed for the Hyundai unit's red ink.
The new combined Korean chip firm would solve LG Semicon's perplexing
need for heavy investment to move into deep ultraviolet sub-0.25-micron
chip processing. Sources said LG has trailed rivals in setting up fabs for the
next-generation DRAM production, and would be hard pressed to compete
in the aggressive race to shrink chips for lower costs and higher yields.
Hyundai is installing sub-quarter-micron equipment in several fabs under
special financing deals worked out with suppliers.
More on the merger...............
koreaherald.co.kr |
