LG agrees to turn over full control of semiconductor operations to Hyundai)
SEOUL (AFX-ASIA) - The LG Group has agreed to grant Hyundai Group full
control of the semiconductor merger of LG Semicon Ltd and Hyundai Electronics
Co Ltd, LG Group restructuring team head Kang Yoo-Shik said.
"We will transfer all stakes in LG Semicon Ltd to Hyundai Electronics
Industries Co Ltd," he said.
"Hyundai will take over LG Semicon's equity 100 pct," he said.
LG's decision followed talks between President Kim Dae-Jung and LG Group
chief Koo Bon-Moo.
The president's office quoted Koo as saying: "I made up my mind to help our
economy gain further credibility abroad."
Hyundai Electronics president Kim Young-Hwan said there will not be any
massive layoffs as a result of the merger but said one or two lines might be
closed "if the market situation gets worse."
He said the main focus of the takeover will be combining resources for
research and technology, promising to maximize the synergy from the development
of next-generation memory chips.
"You need to focus more on research and technology than on capacity."
He also dismissed any legal problems in the acquisition and concerns over
possible trade disputes with other countries.
The merged firm hopes to attract up to 1.5 bln usd in foreign capital as
the two firms have 11 trln won in total debt, including 4.5 trln won kept by LG
Semicon, he said.
He also said the combined unit can produce 280,000 8-inch wafers a month,
far higher than the capacity of Samsung Eletronics Co which had 18.8 pct of the
world's memory chip market last year.
Hyundai's taking the whole management of the merged entity is expected to
step up corporate shake-ups in other sectors, such as petrochemicals and
telecommunications, analysts said.
Earlier, local newspapers reported LG Group might be allowed to take a
controlling stake in petrochemicals or telecommunications.
"Even after taking over Kia Motors, Hyundai took up the semiconductor
operations in the deal with LG and therefore, Hyundai seems not in a position
to covet other sectors," an analyst with a leading local brokerage said.
Hyundai might then have to relinquish its liquid chrystal display and
telecommunications divisions (to other conglomerates), he said.
The merged semiconductor entity will be able to target the world's largest
DRAM makers, ahead of Samsung Electronics, the analyst said.
"Although Samsung holds the sophisticated chips such as 64M and 256M DRAMs,
LG is running ahead of Samsung in the 16M DRAMs and other lower liners, " he
said.
However, the integration of the two small local chipmakers is likely to
erode their aggregate market share as PC producers opt to diversify their
suppliers, the analyst said.
There are also concerns over possible trade disputes with the U.S. and
Japan as South Korea is supposed to take up to a 30-35 pct share in the DRAM
market, he said. |
