Struggling Korean semiconductor industry hints at a rebound
B.H. Seo
Seoul, South Korea - The Korean semiconductor industry continues to show signs of recovery after months of decline.
Several positive indicators surfaced in recent weeks suggesting that chip makers who are in the midst of government-led merger negotiations are on the mend. LG Semicon, based here, said it received a $30 million advance payment from Taiwanese notebook PC maker Compal Co. for DRAM products and thin-film transistor (TFT) LCDs. The funds are part of a payment due next year on an earlier supply agreement.
The payment marks the first time since the financial crisis hit South Korea last year that a domestic semiconductor maker has received a foreign-currency payment in advance from a large overseas customer as a way to guarantee product shipments for 1999.
Compal's payment secures a steady supply of LG's synchronous DRAMs, Rambus DRAMs and 13.3-, 14.1- and 15.1-inch TFT LCDs. The displays are expected to be in short supply next year.
LG agreed in October to supply Compal with $250 million worth of memory chips and LCDs in 1999. The deal calls for LG to receive $100 million from the sales in advance. Compal is expected to pay the remaining $70 million by the end of the year as LG Semicon begins deliveries.
The deal also boosts LG's LCD strategy as demand for TFT-LCDs used in notebook PCs and desktops heats up. Market analysts such as DisplaySearch predict that global supply and demand would balance out by the end of this year and that the supply glut would be eliminated in 1999.
LG announced last month it was spinning off its flat-panel display operations into a new LCD subsidiary of LG Electronics. The spin-off was part of a restructuring plan that calls for LG Semicon and Hyundai to merge their semiconductor operations. Industry observers said the spin-off was prompted by LG's desire to retain the profitable display operation as South Korea's semiconductor industry is streamlined by the government.
Exports on rise
An industry group reported, meanwhile, that exports of electronics, information and communications products rose in November after seven months of decline. According to preliminary export figures announced in early December by the Electronic Industry Association of Korea, exports reached $2.09 billion in the first three weeks of November, a 3.1 percent gain over the same period last year.
Analysts here attributed the export gain to growing demand for semiconductors, which made up 40 percent of Korean exports during the period.
An association spokesman said the increase resulted from an expected year-end rise in exports as the electronics industry readies 1999 production. He said total exports for November are likely to reach $3 billion, an increase of up to 4 percent over last November. |
