Samsung, Hynix seen to bask in possible merger of rival firms

HONG KONG, Jan. 30 (Yonhap) -- Korean chip giants Samsung Electronics Co. and Hynix Semiconductor Inc. will likely benefit from a possible consolidation of rival firms overseas amid the memory industry's downturn, a report said Monday.

U.S. rival Micron Technology Inc. was reported to be in discussions with Japan's Elpida Memory Inc. and Taiwan's Nanya Technology Corp. to consolidate with them into a single entity, as memory chip manufacturers continue to be hurt by an extended decline in chip prices.

Swiss investment bank UBS said in a report that the move will likely have a positive impact on Samsung and Hynix by reducing competition and mitigating a global overcapacity of the dynamic random access memory (DRAM) industry.

"Good execution could favor Micron over time, but for now, we think Samsung and Hynix would see significant shared benefits from less DRAM vendors and possible longer-term net reduction in overall DRAM industry capacity," said Nicolas Gaudois, a UBS analyst.

Samsung and Hynix were buffeted by weak prices and low demand, triggered by setbacks in the global computer markets. Samsung saw its revenues drop in its memory chip business last year, while Hynix swung to a net loss in the third quarter.

Prices of DRAM chips have suffered a slump as computer makers were reluctant to increase their inventories due to feeble consumer demand resulted from economic uncertainties and damage wrought by flooding in Thailand, the world's leading manufacturing base for computer drives.

According to market researcher IHS iSuppli, Samsung expanded its portion in the global DRAM market to a record quarterly high in the third quarter last year, accounting for 45 percent of global DRAM revenues.

Hynix, which is planned to be acquired by SK Telecom Co., retained its runner-up position in the DRAM market with 22 percent.

Elpida was the No. 3 maker with 13 percent, followed by Micron with 12 percent. (Yonhap)