Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Alliance Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (3934)	9/10/1998 12:26:00 AM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

FOCUS: Hyundai/LG chip merger positive on debt/no underlying gain for sector SEOUL (AFX-ASIA) - The proposed merger of the semiconductor units of the Hyundai and LG groups may be positive for the companies in terms of debt and relations with the government but is likely to do little in the near-term to tackle overcapacity, the key problem in the industry, analysts said. While the precise terms of the merger remain to be resolved, it is expected that the debt position of the parents and the merged entitity will be improved by the tie-up, which was agreed in line with the government-led restructuring of the units of the top five chaebol. The entity to be formed by Hyundai Electronics Industries Co Ltd and LG Semicon Ltd will be the second largest local chipmaker after Samsung Electronics, with a combined global market share of 17 pct, a figure which highlights the importance of the deal to the world semiconductor industry. The merger will also provide the basis for the companies to strengthen their financial position, particularly since the deal follows on from government policy to reform the economy and crucially, the position of the chaebol within it. "The merged player could help bring price stability and reduce price fluctuations in the spot market," said Eugene Ha, semiconductor sector analyst at Samsung Securities. "In addition, redundant investments should shrink and thus less DRAM capacity would be expected to come on line in the mid- to long-term," Ha said. However, the new company will find it difficult to make a profit within the next 3-4 years given its huge debt and cashflow difficulties, which can be expected to forestall any aggressive investment in next-generation chips.