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The brakes have been put on Hynix Semiconductor's business performance, which had seemed unstoppable since last year. The company will almost certainly suffer massive losses in the forth quarter, and the falling price of D-RAM, the company's major product, dims its prospects even further. And on top of this, Hynix is being accused of leaking a key technology to a Taiwanese company.
¡ß The D-RAM crisis
It was reported on Sunday that Hynix is heading for record sales losses due to the falling price of D-RAM, which accounts for 60 to 70 percent of the company's sales. According to DRAMeXchange, a leading e-marketplace for memory chips, the contract price of 512 Mb DDR2, the best-selling product in the market, has tumbled to as low as US$1. At that price the Korean company cannot even achieve the break-even point. What's worse, the product's spot price fell to no more than $0.92.
Goodmorning Shinhan Securities and CJ Investment and Securities forecast that the Korean chipmaker will post operating losses of some W200 billion (US$1=W930) in the fourth quarter. Despite various unfavorable conditions, the company had recorded consecutive quarterly gains for four years and three months.
¡ß Technology leak controversy
The world's second largest chipmaker is also embroiled in a controversy about a possible technology leak in a plan to provide a key chipmaking technology to a Taiwanese partner, ProMOS Technologies. The plan to produce 66-nano DRAM chips in Taiwan has prompted furious opposition from Hynix's Korean rivals. Experts are concerned that if the advanced 66-nano process technology is sent to Taiwan, Taiwanese competitors will be able to soon overtake Korean companies in the global market. In October Hynix provided the 66-nano technology for a joint plant in Wuxi, China. The 66-nano process is up to 40 percent more productive than the 70-nano level process currently used by Taiwanese companies.
A global trend in the memory chip industry is to reduce production costs by achieving economies of scale through cranking up production. This has resulted in the survival of only a few companies with the most competitive prices, and they have monopolized the market. Min Hoo-sik, an executive at Tempis Capital Management, said that a leader in a time like this needs not only experience in drawing outside investors, making strategic investment decisions and controlling production, but also the ability to arbitrate.
(englishnews@chosun.com )
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