Semiconductor Industry Sales Trends Message Board

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Technology Stocks : Semiconductor Industry Sales Trends

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To: Michael Sphar who wrote (76)	9/3/1998 5:19:00 PM
From: Michael Sphar	Read Replies (1) of 105

Two Koreans merge in principle, still working the details: Hyundai, LG Semicon To Merge Chip Operations (09/03/98; 10:22 a.m. ET) By Jack Robertson, Electronic Buyers' News Hyundai Electronics and LG Semicon agreed late Thursday afternoon Korean time to combine their semiconductor operations into a single company. A Hyundai spokesman told Electronic Buyers' News the chip agreement had been signed, but he said the two companies remained sharply divided over control of the new chip entity. The Hyundai-LG Semicon semiconductor combine was part of a massive swap of chaebol subsidiaries in aerospace, 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 company would combine LG Semicon's estimated 6.7 percent of the global dynamic RAM market and Hyundai's 9 percent share to become neck-and-neck with Micron Technology after the U.S. company's absorption of Texas Instrument DRAM fabs. It was too soon to get early industry reaction, though analysts previously have said simply gaining larger economies of scale in the DRAM market isn't that much of an immediateadvantage 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 company separately was struggling to cope with huge outstanding loans. Combining the mountainous debt could be an awesome burden for any single new company. Both chip operations have run up steep losses. LG Semicon reported a $188 million loss for the first six months ended June 30. Hyundai Electronics Industries, 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 overall Hyundai unit's red ink. The new combined Korean chip company would solve LG Semicon's perplexing need for heavy investment to move into deep ultraviolet sub-quarter-micron feature-size chip-processing. Sources said LG has trailed rivals in the industry 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.

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