Elpida-led merger not a threat: Hynix CEO

The chief executive of Hynix Semiconductor yesterday dismissed concerns that a potential merger of smaller rivals may threaten the Korean chipmaker.

Kim Jong-kap also said his company is "open" to seeking more funding in addition to 800 billion won ($588 million) it is set to receive to cope with a drawn-out slump in the chip industry.

Hynix, the world`s No. 2 memory chip maker, and its smaller competitors have been grappling with cash shortage as oversupply has dragged down chip prices, leading to losses. The economic downturn, which has battered demand for consumer electronics, has been further eroding chip prices and deepening losses.

Japan`s top memory chip maker Elpida is reportedly seeking to merge with Taiwanese chipmakers to cope with the industry downturn. The potential combination may lead to the creation of the world`s No. 2 DRAM maker in market share, and may end Hynix`s alliance with ProMOS, Taiwan`s No. 3 memory chipmaker, analysts said.

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"(The potential tie-up) is not a big concern," Kim said.

"The key to competitiveness is not a temporary market share, but a long-term competitiveness in technology and cost," he added.

He noted that Hynix is the only chipmaker in the world which produces DRAM chips based on cost-efficient 54-nanometer technology. He said it will take "about one year" for its competitors to catch up.

The company will also start mass-producing DRAM chips based on 44-nanotechnology in the latter half of this year, while planning to start mass-producing 41-nano NAND flash memory chips by March, Kim and company executives said.

Using advanced processing technology allows a single wafer to produce more chips, which raises cost efficiency. DRAM chips are used mainly in personal computers, while NAND flash memory chips are used in music players and other portable gadgets.

He said Hynix hopes to maintain its strategic alliance with ProMOS, but if the tie-up ends, it would not have a "big impact" on the company`s business as ProMOS represents less than 5 percent of Hynix`s total chips.

Kim did not rule out the possibility of additional financing.

"We plan to take appropriate action if needed," Kim said.

The world`s No. 2 maker of memory chips plans to raise 300 billion won by issuing new shares today and tomorrow and by receiving an additional 500 million won in loans from its major shareholders.

He also said the company`s cash flow and cash equivalent fell "slightly" in the fourth quarter of 2008 from 1.23 trillion won the previous quarter.

He said the company`s facility investment may be around the early 1 trillion won level, adding the spending is subject to a change depending on the market environment.

He also forecast that the memory chip sector is expected to halve facility investments in 2009 from a year ago, after cutting them by 40 percent year-on-year in 2008.

He said the memory chip market may have bottomed out in the fourth quarter of 2008 and could rebound in the current quarter as global chipmakers slash output amid tumbling demand.

By Jin Hyun-joo



(hjjin@heraldm.com)