PROFILE - SOUTH KOREA'S SEMICONDUCTOR INDUSTRY (APRIL 1999)
Apr 13, 1999 (Asia Pulse via COMTEX) --
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PROFILE OF S KOREA'S SEMICONDUCTOR INDUSTRY PREPARED BY ASIA PULSE
ANALYSTS (APRIL 1999)
********************************************** OVERVIEW: Most Korean
semiconductor products are bound for foreign markets, but most of the
domestic demand for such products are imports. The lack of a link
between domestic demand and production characterizes the Korean
industry.
The semiconductor industry is not expected to post any measurable rise
in exports as was seen during the 1990s. Over the short-term, however,
the industry is expected to get out of the recession and post steady
growth until 2001. Thereafter, growth is expected to slow down because
of a generational shift in PCs, the largest demand source for memory
semiconductor chips.
Most users who bought a 486-class PC amid the boom for Internet and PC
communications in 1995 are expected to turn to Pentium II PCs to keep
up with the explosion in e-commerce and multimedia.
In memory chips, the industry boasts technology matching that of
advanced countries but is behind in non-memory chips in terms of basic
and design technologies.
INVESTMENTS: Intel Corp. will invest US$100 million in Samsung
Electronics for the production of direct Rambus DRAM, touted as the
next-generation memory chips expected to be used from the latter half
of this year. The chip is about six times faster in transmission speed
than the 100Mhz synchronous DRAM.
Intel, which also invested $500 million in Microne in connection with
the production of Rambus DRAM, once initiated investment talks with
Hyundai Electronics Industries and is also known to have made an
investment proposal to Japan's NEC. The U.S. giant's investment
initiatives are apparently designed to ensure a smooth supply of DRAM
to prepare for looming signs of a semiconductor boom.
The supply of direct Rambus DRAM chips is expected to fall short of
demand as DRAM producers have trimmed investments since 1996 due to a
downturn in DRAM prices. The supply shortage involving the product is
likely to hurt Intel's sales of Pentium III.
Intel's investment initiatives toward DRAM producers are apparently
intended to enable the company to hold sway in computer markets by
securing a smooth DRAM supply.
Whether or not Intel intends to establish a capital link with Hyundai
Electronics is a matter of interest to the local industry because the
latter is poised to acquire LG Semicon under business restructuring
efforts to reduce heavy debts and bloated overlapping investments.
Hyundai Electronics needs to secure money needed to take over LG
Semicon and to reduce its debt-to-equity ratio to below 200 percent by
the end of this year. In addition, Hyundai also requires a lot of funds
to finance R&D and facility investments.
LG Semicon is armed with technology sufficient to develop and produce
direct Rambus DRAM chips. In early June last year, it became the first
company in the world to successfullly develop and market the 64-M
direct Rambus DRAM.
OUTLOOK: The future of the industry hinges on technological
competitiveness for complex products like system IC rather than for
memory chips or microprocessors.
The semiconductor market has been turning into a consumer-oriented one.
In order to meet the diverse needs of customers, the industry must
develop application technology covering circuit design, software and
systems.
In the IMF era, investment in the semiconductor industry dropped
sharply last year, but new investments have been edging up recently and
are expected to peak during next year.
Since the life cycle of a semiconductor is about three years, the
industry is required to replace its existing facilities.
In the non-memory sector, the industry needs experts for the
development of core technology and design.
In the memory sector, Hyundai Electronics is expected to emerge as a
major player along with Samsung Electronics after taking over LG
Semicon.
(Sources: Korea Development Bank; Korea Electronics Ind. Coop.;
Electronic Industries Association of Korea)
OUTLOOK FOR THE SEMICONDUCTOR INDUSTRY '97 '98 '99 2000
'01 '02 '03
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Production*18,923 25,510 27,010 29,030 34,150 36,810 39,140 Domestic
14,098 18,110 19,360 20,510 23,010 24,170 26,030 Demand* Exports 17,
424 16,740 18,870 21,230 25,640 27,310 28,590 World 12.1
12.5 12.1 12.4 14.1 15.1 15.8 Share
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* Billions of won Millions of U.S. dollars Pct. (Source: Electronic
Industries Association of Korea)
CONTACTS: Electronics Industries Association of Korea 648,
Yoksam-dong, Kangnam-gu, Seoul
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