Semiconductor Industry Is on Restructuring

Domestic and foreign semiconductor D RAM industries are going through the rapid restructuring process.

By the slowdown of the world economy, many D RAM businesses in Japan and Taiwan have closed their factories and Hynix and U.S.`s Micron Technology are only maintaining their way through by the reducing production.

Particularly, when Hynix merges with Micron, many less competitive Japanese and Taiwanese companies are expected to collapse. Once the restructuring is completed, the problem of chronic over-supply of D RAM since 1996 will be resolved, which will be an opportunity for the domestic semiconductor business.

Semiconductor D RAM Business Steps On Restructuring: The successive reduction and closing down of factories were caused by the plunge in selling price by the over-supply that had been lower than half of the manufacturing cost. Even Samsung Electronics, the top D RAM manufacturer had suffered deficits and the following businesses are facing a fork in the road to life and death.

The D RAM business restructuring began in Japan at first. Toshiba laid off 17,000 employees and they are pursuing to merge its memory sect to Infinion. And the company is will give the D RAM sect if it cannot sell it. In addition, NEC stopped the D RAM production in Scotland factories and sold the D RAM production line to Elpida Memory, which is a joint corporation of Hitachi.

Winbond Electronic Corporation in Taiwan also decided to reduce the production of D RAM and Vanguard Corporation, which was a manufacturer of D RAM only, transformed itself to a foundry manufacturer.

Less Competitive Business Will Be Screened Out: The Japanese and Taiwanese businesses that are less competitive in the production cost are now facing the most serious crisis to maintain their business. The Japanese companies that controlled the international market in 1980s had to reduce their production because they had lost their competitiveness while the investment idling in the research and development.

Research director of Kyobo Security Kim Young-Jun said, "the companies that have low technologies have no more interest in semiconductor business."

Hitachi laid off 430 employees of the D RAM factory in Singapore and will lower its operation rate from 60 percent to 30 percent. Fujitsu also decided to stop the operation of the semiconductor-producing factory in Oregon in January next year to close the factory later on.

Choi Seok-Po, researcher of Merits Securities said, "once the merge of Hynix and Micron is clarified, many of less competitive Japanese and Taiwanese companies will give up the D RAM business. Recent restructuring trend of the domestic D RAM industry will be an advantage for the strengthening of the competitiveness of the domestic industries."

Jeong-Hun Park yhchoi65@donga.com