By Kim Yoo-chul
Staff Reporter
Samsung Electronics’ chief chipmaker Wednesday urged Korean chip and equipment makers to form a united front to maintain the nation’s leadership in the global chip market.
``Now it is time to join forces,’’ Kwon Oh-hyun, the president of Samsung Electronics chip business said in a key note speech at a conference with industry’s experts held in a Seoul hotel.
``Japanese and U.S. rivals have been strengthening their competitiveness by striking a strategic partnerships and even the late-comer Taiwanese players are threatening us by narrowing the technology gap,’’ Kwon added.
Experts say leading chipmakers have fully acknowledged that they ``can’t stand aside’’ from consolidation in the semiconductor industry, forcing them to seek alliances with rivals for survival.
The global memory chip market has turned into a ``red ocean’’ because of the continuing supply glut, spurred by higher expectations for Microsoft’s Windows Vista system. To offset falling profits, chipmakers are busy cutting costs and transferring their distinctive chip technologies to latecomers on a contract basis.
Kwon added he sees a slight turnaround in prices of dynamic random access memory (DRAM) chips. ``But, it is still uncertain for the outlook in the second half.’’
Hynix Semiconductor CEO Kim Jong-kap also said his company expects the so-called ``iPhone effects’’ on its NAND flash chip business. Apple introduced the 3G phone for just $200. NAND chips are used in high-end handheld-gadgets.
Hynix ranks No. 2 in the global NAND chip market with a 27.3 percent share, while Samsung tops the position with 42 percent, according to an estimate by iSuppli.
Regarding forecasts for second quarter earnings, Kwon responded that his division will post slightly-increased results.
``Samsung’s semiconductor division has been on the right track in this year’s investment in chips as planned,’’ Kwon said. Samsung is planning to invest at least 7 trillion won in the memory chip business, this year.
``Yes, it is expected that we will trim losses in the second quarter from the previous quarter.’’ Hynix’s Kim backed up his rival’s stance.
At the meeting, Samsung and Hynix decided they will forge a united front to develop and standardize next-generation semiconductors to stay ahead of foreign rivals.
Under the agreement, both players will jointly develop spin torque transfer magnetic random access memory (STT-MRAM) chips backed by a government program starting September.
``The rare tie-up aims to retain the South Korean leadership in the global microchip market and will help Korean chipmakers do away with the need to pay royalties to foreign rivals,’’ Knowledge Economy Minister Lee Young-ho said.
The program, if it runs smoothly, is expected to generate an estimated $500 million worth of royalty earnings.
The deal comes after Japan’s Toshiba, NEX and Fujitsu joined forces and agreed to spend some $28 million from 2006 to 2010 to develop STT-MRAM devices.
South Korean chipmakers have been paying hundreds of millions of dollars every year to companies like Intel and Toshiba that currently hold patents to DRAM and NAND devices, partly contributing to the country’s chronic trade deficit with Japan and the U.S.