Hynix Semiconductor Inc, the third-largest computer-memory chipmaker, may cut production in an effort to boost the price of chips that now sell for less than they cost to make.
"As the situation is bad we could consider [cutting production]," said Kang In-young, a spokeswoman for Hynix. "We understand other companies are also considering cuts."
Hynix, which relies on computer-memory chips for 71 percent of sales, is expected to lose 508 billion won (US$392 million) this year as the price of its main product languishes. Hynix has sold or spun off its telecommunications, computer monitor and flat-panel display businesses to concentrate on chips.
Samsung Electronics Co and Micron Technology Inc, Hynix's rivals in the memory-chip business, say they have no plans to cut production even as computer makers slash orders for components as they try to use up extra inventory and adjust to weaker demand.
The slump has raised speculation memory-chip makers may regulate supply to create shortages and boost prices.
"Every time they have done it, it has worked quite nicely: three months later we saw a sharp increase in prices," said Chon Chong-hwa, an electronics analyst at Salomon Smith Barney in Seoul.
Still, "shutting down production has a bad psychological impact on the company even though it's good for the industry. No one wants to be the first to announce a cut."
South Korean memory-chip makers, which account for about 40 percent of the US$30-billion-a-year industry, last cut production in 1998, shutting their plants for two weeks. Memory chip prices rebounded as supply of the devices, which are sold in the millions per month, fell short of demand.
The spot price of the PC100 64-megabit dynamic random access memory chip fell to less than a dollar last week, down from nearly US$9 a year ago.
Memory-chip sales are expected to drop by more than 40 percent this year, according to a recent forecast by market researcher IDC. Hynix and Micron, the second-largest memory-chip maker, have already reported losses this year.
"It may be the only hope right now," said Jay Tsai, a spokesman for Vanguard International Semiconductor Corp (
"In an upturn everyone can make money, in a flat period only the leading players, and in a downturn no one can."
Production cuts, to be effective, would require the main producers of memory chips to act together or risk losing market share to a competitor, analysts say. If they do act in concert they may find themselves the target of price-fixing allegations. A consensus so far may be difficult to find.
"We have heard rumors about other manufacturers but Micron continues to operate at full power with no plan to reduce capacity," said Sean Mahoney, a spokesman for Micron, in an e-mail reply to questions. Micron said last week it will reduce spending on manufacturing improvements by 44 percent in fiscal 2002 as it awaits a rebound in demand.
Samsung, which plans to spend more on new facilities than its two largest rivals combined, may also be refusing to cooperate, judging it has more to gain from putting more pressure on rivals.
In the first three months of 2001, the company earned 1.2 trillion won (US$912 million), beating analysts' estimates, Samsung has switched production to alternative designs for new chips which competitors are not yet making in large numbers.
Samsung dominates the market for Rambus Inc-designed memory chips, taking advantage of the fact Intel Corp's latest processor, as yet, will only work with that kind of DRAM.
Micron and Hynix concentrate on an alternative called double data rate, for which Intel has yet to release a chipset. Chipsets regulate the flow of data between a processor and other parts of a computer.
Samsung will continue to increase the proportion of its plants devoted to larger-capacity chips such as 256-megabit DRAM, Cho Sung-in, a company spokeswoman, said.
Some manufacturers doubt whether production cuts will work even with coordinated industry action.
"It probably will be helpful but there are still questions about demand," said Mike Liu, a spokesman for Winbond Electronics Corp (
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source