Here's another take on the Korean purchase of ASML litho DUV equipment. The source may be biased, but it is a news source.................
koreaherald.co.kr
03-05-98 Korean Chip Makers Dismiss U.S. Suspicion of Expansion in Facilities Investment in 1998
By Yu Kun-ha Staff reporter
How much will Korean chip manufacturers be able to invest in production facilities this year?
Years of recession in the global memory market and the ongoing financial crunch are forcing the Korean chip trio to
scale down their investment plans.
But are they really cutting investment in production facilities?
Company officials say they are, but the American chip industry and media seem unconvinced. For instance, Steve
Appleton, chairman of Micron Technol-ogy, a memory manufacturer in Boise, Idaho, asserted in a recent congressional
hearing that Korean chip makers are sticking by their original investment plans.
The Micron chairman has been spearheading a vigorous lobbying campaign to move the U.S. government, Congress
and mass media to take steps against the Korean chip industry.
More recently, an American chip industry journal reported that Korean chip companies are forging ahead with their
expansion projects, despite the Asian financial crisis and challenges by the American Semiconductor Industry
Association (SIA).
The report was prompted by Samsung's plan to purchase new lithography devices from Dutch-based ASM
Lithography. Samsung has placed an order for the equipment to upgrade production lines for 64-megabit DRAMs.
According to Samsung officials, the equipment costs several million dollars, not hundreds of millions of dollars as
reported. They said that Samsung's investment budget for this year has been set at $1 billion, half of last year's $2
billion.
Samsung's capital spending, they said, will not decrease much over last year, when measured in terms of the Korean
won. But given that a large proportion of investment is made to purchase foreign production equipment, which has to be
paid for in dollars, the company's actual investment capability sharply dwindles.
According to the American media report, Hyundai Electronics Industries and LG Semicon also have not backed off
ambitious chip plans, despite financial pressure and the U.S. jawboning.
But Hyundai, which has sold off its U.S.-based subsidiary, Symbios Logic, to Adaptec for $775 million, announced
earlier this year a much contracted investment plan.
According to the plan, Hyundai's total investment budget for this year is one trillion won, a 40 percent cut from last
year's 1.6 trillion won. In dollar terms, the cut is much deeper. Some industry watchers doubt the company can meet
this year's investment goal.
Not all of this money will go into its chip operation. The company has earmarked some 700 billion won for facility
expansion for 64-megabit chips and development of static RAM and flash memory chips.
The rest of the money will be channeled into the company's telecom business, especially the development and
production of new cellular handsets. Hyundai has recently begun a determined push for this high-growth telecom sector.
What about LG Semicon? The company was reportedly seeking to surpass Micron Technology to become the largest
global producer of 16-megabit DRAMs this year by shipping 315 million units compared with Micron's 300 million.
An LG Semicon spokesman said the company has been cutting down on its 16-megabit output, although to a lesser
degree than Samsung Electronics. LG, he said, may presently have the world's largest production capacity for
16-megabit devices but this does not necessarily mean it will emerge as the largest supplier.
LG Semicon has not yet disclosed its investment plan for this year. According to the spokesman, the company has been
carefully following recent developments in the global memory industry. But he expected LG's investment to go down
from last year's two trillion won to below one trillion won this year.
''It is nonsense to expect Korean firms to stick to their original investment plans drawn up last year. Under the current
situation, they cannot help scaling down,'' the official said.
According to an official of the Korea Semiconductor Industry Association, it is difficult to estimate how much the
Korean chip trio will actually invest this year because the global memory industry is going through transition.
He said the same is true of Taiwanese and Japanese chip producers. For instance, he said, market research firms
present widely different projections on the investment amount of Taiwanese firms.
''As the situation is highly fluid, most players will closely watch the moves of their competitors in determining the proper
level of investment,'' the official said, adding, however, that the Korean chip trio do not have the resources to maintain
last year's level of capital spending.
In their desperate bid to fund facility upgrading, the Korean companies have asked foreign chip-making equipment and
materials vendors to help them get loans from foreign financial institutions.
Responding to this call for help, Semiconductor Equipment and Materials International (SEMI) is moving to provide
support to the besieged Korean chip industry.
SEMI's American member firms are countering the anti-Korean campaign of Micron Technology with the
Semiconductor Industry Association standing behind it.
According to industry watchers, the two organizations also squared off against each other in 1993 when Micron
Technology filed a dumping suit against Korean chip producers.
Then, the Korean firms emerged almost unscathed from the suit, thanks largely to the support of American computer
vendors who rely on chip shipments from Korea.
American computer vendors, according to industry watchers, have so far been silent but are expected to side with
Korean chip suppliers as they still rely heavily on Korean memory chips. |
