Giving up of World Semiconductor D-RAM Industry

The world semiconductor D-RAM industry has speeded up a restructuring. There will be many companies which will reduce the business scale or interrupt the D-RAM business.

Infineon, Germany and ProMOS, Taiwan broke their partnership on October 4 and so it frustrated the D-RAM production of ProMOS. Since 2001, TOSHIBA, VANGUARD, Fujitsu and Mitsubishi gave up the D-RAM business. Except Samsung Electronics, almost D-RAM companies have been in a critical situation.

Paradoxically, it can be ‘good news’ which will support a stock price of Samsung Electronics.

▽ Immediate Restructuring 〓 As the restructuring of D-RAM industry is clear for the first half of 2003, it is forecasted that D-RAM market will recover from the second half of the year. However, Owing to rapid restructuring, the recovery period of D-RAM industry will get shorter to the first half of next year.

Wall Street Journal said on October 4 (local time), “As the partnership between Infineon and ProMOS was broke, it is forecasted that it will frustrate in the memory semiconductor supply. ProMOS is likely to withdraw because it has been in a liquidity crisis and the production of the memory semiconductor is estimated at a half owing to annulment of the contract.

In October, Mitsubishi gave up the business by selling the D-RAM business to Elpida. The annulment of Infineon and the business giving up of Mitsubishi has leaded the D-RAM industry to a center of the restructuring.

▽Benefit of Samsung Electronics 〓 Jeong Chang-Won, a researcher of Daewoo Securities said, “Samsung Electronics will take the D-RAM business of abandoned companies. The world D-RAM market share of Samsung Electronics will exceed 40% after 2004.”

Choi, Si-Won, the researcher of Sejing Securities said, “7% market share of ProMOS and Mitsubishi will become a portion of Samsung Electronics.”

There will be 40% of the difference of the manufacturing cost between Samsung Electronics and other companies in the third quarter. The analysis said that the difference of the manufacturing costs between Samsung Electronics and other companies will reach 50% when 300㎜ semiconductor production line will increase and Nano technology will be introduced next year.

▽PC Market Recovery will be advantageous to Samsung Electronics for a long term 〓The Asian and Pacific technology stock investment strategist of UBS Warburg Securities forecasts on October 7 that the world PC demand will decrease by 1% over the last year, but will increase by 8% next year. The world PC demand is 25% for individuals(or family) and 75% for the company and government. However, the demand of the corporate field will be saved in the second half of the next year.

He said “Korean IT companies have good performance over the competitors of other countries having the competitiveness in D-RAM and display terminal”. However, there is a serious change of profits depending on the economy. The business performance could be significantly shaken owing to a low price policy of China.

Eun-Woo Lee Na-Yeon Lee libra@donga.com larosa@donga.com