"Hynix is still on shaky ground," said Kim Young-joon, who manages 400 billion won (US$30 5 million) in equity at Samsung Investment Trust Management Co in Seoul. "We don't know if whatever measures the creditors come up with will be enough for Hynix to survive."
Supply will continue to exceed demand by about 15 percent for as many as three more quarters, said Michael Tsai, president of Powerchip Semiconductor Corp which makes chips for Japan's Mitsubishi Electric Corp.
"We need more consolidation in the industry," said Tsai. "The strategy of our company is based on this assumption."
Taiwanese companies, which account for about a fifth of production, depend on partnerships with overseas companies that shoulder most of the research expenses necessary to develop cheaper, smaller chips with more memory capacity.
Winbond Electronics Corp (
"Anyone smaller than Samsung or Micron is headed for consolidation," said Tseng Hui-min, the chief financial officer for Winbond, Taiwan's biggest computer memory chipmaker.
Winbond yesterday said September sales plunged 65 percent as terrorist attacks in the US hastened a slump in personal computer sales and the chips that run them.
Every major manufacturer, with the exception of Samsung, lost money making DRAM chips in their most recent financial quarter.
Even Samsung, whose profit fell in the second quarter, has sounded a note of caution, saying it will try to stem losses for the remainder of the year.
While makers grapple with their own problems, most admit they can do little about demand.
No demand, no dice
"This is the difference with downturns in the past -- there usually always was demand," said Micron's Mahoney.
This year is the first since 1985 that personal computer shipments have declined. Though a worldwide economic slowdown has played its part in slowing sales, Chan Chang-ho, who works in a glitzy computer showroom three floors above Dong Sin's Chang says there's a more fundamental reason.
"If you bought a computer in the last two years you shouldn't expect much of an improvement from a new model," he said. Chan recommends customers consider upgrading their current machines before purchasing a new one.
In the past, the introduction of new software and operating systems from Microsoft and others meant more demand for faster computers requiring ever-greater memory capacity to handle larger programs. Not so this time around.
The latest attempt by Microsoft to stimulate demand with a new product has so far fallen flat. Personal computer manufacturers say the introduction of Windows XP, the latest Microsoft operating system, has had little impact on personal computer demand ahead of its official introduction this month
"The recovery may be pushed out until the second half of next year," said Jonathan Ross, an analyst with Goldman Sachs Asia Llc in Hong Kong.
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