Hynix chip production falls behind

Hynix Semiconductor Inc., the world’s second-largest memory chipmaker, is struggling to keep pace with demand from consumer products including Apple Inc.’s iPhone as the company shifts to a new manufacturing process.
“We have some inadequacies and we need to work to plug those holes,” Chief Executive Officer Kim Jong-kap said in an interview in Seoul on Monday. “We’re slightly behind our competitors, but it’s not a big problem.”
He declined to provide specifics. The company may have missed some of its targets by half in making so-called NAND chips, according to a BNP Paribas SA report last week. Hynix needs to boost production to catch up to Samsung Electronics Co. after prices doubled in the past four months in a market that generated $12.4 billion in sales last year.
“Having production problems at a time when conditions for NAND are so good is obviously a disadvantage and helps the competition,” said Lee Seung-jun, who manages about $1.1 billion at CJ Asset Management Co. in Seoul. “Making small things even smaller is getting harder so we’re going to see more of these difficulties in the future; it’s not just Hynix.”
Ichon-based Hynix is shifting production to new technology that allows chipmakers to make more semiconductors to save costs. The company in April said 60 percent of its NAND chip production will be based on 60-nanometer technology by the second quarter. Peter Yu, the BNP analyst who wrote the July 6 report, estimated the portion was about 30 percent.
Overall mass-production of NAND chips is proceeding as planned, Park Hyun, a Hynix spokesman, said yesterday, without elaborating. The company is shrinking the widths of transistors in memory chips to 60 nanometers, or billionths of a meter, from 70 and 90 nanometers to become more efficient.
Shifting to 60 nanometers from 70 nanometers increases productivity by 25 percent, while 50-nanometer technology boosts productivity by 60 percent from 60-nanometer chips, according to Samsung, the industry’s largest producer.
Tokyo-based Toshiba Corp., which invented NAND chips two decades ago, said in March that it would increase production of the chips based on 56-nanometer technology by September. Suwon-based Samsung said in April it would begin making 50-nanometer chips in the second quarter. Bloomberg