Reacting to the ongoing market downturn, Hynix Semiconductor Inc announced yesterday it would close its US manufacturing plant, a day after its Taiwanese competitors said they would cut their capital expenditure for this year amid an industry glut.
Hynix said it would shut down its Eugene, Oregon, fabrication facility in light of several short and long-term risks related to the overall dynamic random access memory (DRAM) sector, the company said in a statement on its Web site.
The risks include “a steep reduction in the price of memory chips worldwide and accelerating technological migration toward next-generation production standards,” the world’s second-largest memory chip maker said in the statement.
Production at the Eugene plant would cease by the end of September, Hynix said.
As the company is moving away from the older 200mm wafers produced in Eugene toward newer 300mm wafers, Hynix said it was seriously considering options to utilize the Eugene facility after the closure.
The South Korean chip maker is one of a few major players in the sector to have faced problems because of declining prices of DRAM chips for months, after capacity expanded too rapidly last year amid overly optimistic expectations of higher PC demand following Microsoft Corp’s launch of the Vista operating system.
On Wednesday, Taiwan’s Powerchip Semiconductor Corp (力晶半導體), Nanya Technology Corp (南亞科技) and Inotera Memories Inc (華亞科技) told investors they would cut their capital expenditure this year to combat falling DRAM prices after reporting losses in the second quarter.
Powerchip, the nation’s biggest memory chipmaker, said it would cut its capital spending by 17 percent to NT$24 billion (US$786.5 million) this year, while freezing spending at Rexchip Electronics Corp (瑞晶), a joint venture with Japan’s Elpida Memory Inc, at about NT$40 billion for the year.
Nanya, the second-largest memory chip maker in Taiwan, said on Wednesday it would cut its capital spending to NT$20 billion this year, from the NT$30 billion to NT$40 billion estimated earlier this year, while Inotera said it would reduce its capital spending by 23 percent to NT$23 billion.
“Industry capacity growth appears limited into 2009, while more capital expenditure cuts have been announced across the industry,” Citigroup analyst George Chang (張家麒) wrote in a client note released yesterday.
Citigroup maintained its “buy” rating on Powerchip and gave a target price of NT$10.50, while cutting its target price for Nanya to NT$7.50, the research note showed.
Shares of Powerchip closed 0.25 percent higher at NT$8.02 on the GRETAI Securities Market yesterday, while Nanya shares rose 1.75 percent to NT$11.65 and Inotera shares were up 1.37 percent to NT$14.75 on the Taiwan Stock Exchange.
In Seoul trading, Hynix shares climbed 2.8 percent to close at 23,900 won (US$23.62).