Signs of good times at Hynix

Hundreds of people gathered in a reception hall at Hynix Semiconductor Inc.’s factory in Icheon, Gyeonggi province, last week. Company executives and employees were celebrating a recent operating profit at its memory chip production’s sixth line. Hynix is said to have turned a monthly profit in August with a rebound in memory chip prices for the first time in 17 months. “A recovery in the semiconductor market and the company’s self-rescue efforts may bring Hynix back into the black in the third quarter,” Kwak Yoon-seop, vice chairman of Korea Exchange Bank, said yesterday. After years of restructuring, the company is showing signs of recovery, though some Asian countries including Taiwan are expected to levy countervailing duty on Hynix’s memory chip exports following similar steps by the United States and the European Union. The U.S. government imposed a 44 percent countervailing duty on Hynix’s exports, and the European Commission levied a 35 percent tax. The rebound in dynamic random access memory chip prices since March is the biggest factor in Hynix’s upturn. The spot market price of a 256-megabit double data rate DRAM chip soared to more than $5 from an average of $3.28 in March. “Hynix Semiconductor reaches a break-even point when the price of 256-mega DRAM stays about $5,” said Jeon U-jong, a senior analyst at SK Securities Co. “Considering that the actual sales price of Hynix’s memory chips is 10 to 20 percent higher than the spot market price, Hynix is likely to turn an operating profit in the third quarter.” Its efforts to develop new technologies and products also paid off. A so-called “blue chip project” campaign to increase productivity on existing lines was one example. Recently, Hynix developed the world’s first 0.18-micron high voltage processing technology. One micron is one one-millionth of a meter (3.2 feet); the measurement represents the width of the thinnest circuit track that can be etched onto a wafer surface. The sale of memory chips for mobile handsets, 16-mega and 32-mega Pseudo SRAM, increased five-fold, to $50 million, compared with last year. Hynix plans to develop 64-mega SRAM this year and hopes to expand its sale of Pseudo SRAM to $100 million next year. “The chip plant in Eugene, Oregon can supply memory chips to satisfy demands from the United States and Europe, and the effects of countervailing tax are too bad,” said Kwon O-cheol, a senior official at Hynix. Hynix aims to invest 700 billion won ($595 million) this year but has spent only half the amount so far. Industry analysts say Hynix is six months to one year behind Samsung Electronics Co. in technological competence. Hynix needs to invest a huge amount to upgrade its production process from the 0.13-micron level to 0.1-micron level next year. by Hong Seung-il