Posted : 2009-12-10 16:57
Updated : 2009-12-10 16:57

Hynix Eyes $2 Billion Investment in Chips in 2010

Hynix CEO Kim Jong-kap
By Kim Yoo-chul
Staff Reporter

Hynix Semiconductor, the world's second-biggest computer memory chip maker, plans to invest about 2.3 trillion won (about $2 billion) in 2010 in its semiconductor business.

About 1.5 trillion won will be spent on dynamic random access memory (DRAM) chip projects and the other 800 billion won on NAND flash memory and logic production, according to top industry officials.

The Icheon, Gyeonggi Province-based company plans to inject most of next year's capital expenditure into advanced, low-cost manufacturing technologies rather than building new facilities.

The upbeat investment target represents a 130 percent increase from the 1 trillion won Hynix is expected to have spent for both DRAMs and NAND flash chips for the whole of this year.

DRAM chips are widely used in personal computers. NAND flash chips, which gained popularity early this decade and could be produced on existing DRAM production lines, are widely used in smartphones, digital cameras and other high-end digital devices.

Market analysts had earlier expected Hynix to invest between 1.5 trillion won and 2 trillion won in memory chips in 2010.

"Hynix is seeing a stronger-than-expected demand for the advanced 1-gigabit double data rate three (DDR3) DRAM chips, while expecting a shortage in NAND flash memories," a top-ranking industry official told The Korea Times Thursday.

"Hynix plans to expand the market gap with its Taiwanese rivals and Japan's Elpida in the global DRAM market in 2010. It also plans to sharpen its NAND flash-related technologies by allocating more investment amid the rising demand for high-end digital devices," he said, asking not to be identified due to the sensitivity of the issue.

Hynix spokesman Park Hyun said the company has been engaged in internal talks to fix next year's investment, adding the total could be around 2 trillion won.

"With a greater focus on DRAM chips, Hynix will invest more on NAND flash memories to meet the steadily growing demand for NAND chip-embedded consumer products," Park said.

Tighter Market

Despite seasonal weakness, demand for advanced DRAM chips such as the DDR3 is showing a healthy cycle.

Research firms say increased demand for NAND flash memories will result in shortages as production in 2010 will not keep up with demand.

Contract prices of DRAM chips remained flat during the latter part of November, DRAMeXchange, a Taiwanese online chip clearing house, said.

DRAMeXchange also added that the global NAND flash chip market might see a shortage in next year as demand for smartphones, MP3 players and other digital devices that use the chips will steadily rise as the global economy recovers.

"Investing more in advanced chips by using enhanced technologies will be necessary. The $2 billion investment target is reasonable considering stable chip prices, growing NAND demand and smoother tech migration," Kim Sung-in, an analyst at Kium Investment said.

Hynix is now planning to accelerate development of more advanced 40-nanometer production technology, which should yield more chips at lower costs.

Meanwhile, Taiwanese chipmakers are still on a bumpy road for normalization. Instead of market share, they have placed cash as the top priority to maintain operations.

A chip's transistor components and the spaces between them are measured in nanometers. The smaller and more closely transistors can be packed together, the more powerful the chip.

Hynix CEO Kim Jong-kap expects a smaller-than-usual quarterly fall in DRAM sales in the first quarter of next year.

Kim said strong demand for PCs using Microsoft’s new Windows 7 operating system, growing demand in emerging markets and tight supply due to limited investment by DRAM makers in 2009 are putting Hynix in an upbeat mood for 2010.
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