Hynix CEO bullish about future
By Kim Yoo-chul
Hynix Semiconductor will prevail in the era of relentless consolidation in the tech-intensive industry, according to the company's chief executive officer.
Hynix CEO Kwon Oh-chul made the remarks Thursday after announcing morale-boosting performances of Hynix, after it chalked up 12.1 trillion won in sales and 3.3 trillion won in profits in 2010. Both are record highs.
Amid the explosive demand for memory chips generated by top-tier TVs, tablet PCs and smartphones, Hynix has fared well through securing more orders from set-makers.
By contrast, second-tier chip suppliers struggled to find their feet. This prompted the corner players to find a strategic partnership to stay afloat, eventually creating a big merger & acquisition (M&A) market.
Kwon analyzed that such environments have strengthened the winner-takes-all formula of the high-tech industry, while stressing the world’s No. 2 chipmaker will lead the way.
Based on these presumptions, Hynix sees top-tier chip vendors insulated from market volatilities compared to second-tier ones.
``The gap in technology and competitiveness between players has been widening and Hynix expects the differences to further grow,’’ Kwon said.
The top executive added that its big Japanese and Taiwanese peers including Elpida Memory were experiencing ``deep struggles’’ in managing the chip businesses due to losses incurred by outdated lines.
In tandem with the industry-wide wave, Kwon said the recent partnership with its biggest Japanese chip producers and several Taiwanese ones will not threaten the Icheon, Gyeonggi Province-based Hynix.
``We don’t regard that as a huge risk. Big investment should be followed up on to transform unprofitable facilities into the latest ones, which is a tall task,’’ said the CEO, adding second-string firms will produce chips below their cost in the short run.
Chip prices, which are the most critical factor to gauge bottom lines in the semiconductor industry, were extending their losing streaks amid weak demand for PCs, though Korea’s dynamic duo expects rebound in prices during the first half of 2011.
The high-profile Korean combination is composed of the world’s foremost memory chipmaker Samsung Electronics and runner-up Hynix.
Meanwhile, chipmakers are busy applying thinner technology to its components plants to retain price competitiveness in the highly volatile industry.
Excluding Samsung, Hynix is virtually the only firm that can fully manage 40-nanometer processing technology ahead of their overseas competitors’ 50-, 60-, and 70-nanometer norms.
Reiterating its edge, the Hynix CEO forecasts the supply growth will be limited this year as the technology migration requires a lot of cash and needs the right timing, as well.
``Increased DRAM chip demand will transfer to mobile segments from PCs, while the demand for NAND flash chips will be expanded to PCs from mobile applications,’’ Kwon told reporters.
DRAM chips, whose main function is to read and write data, are widely used in traditional PCs, while NAND flashes go into value-added portable devices including smartphones as the chips can save and restore data even after being switched off.
The chief executive said iPhone maker Apple has emerged as the leader in the global mobile devices, taking up 30 percent of the global NAND flash chip demand, in addition to leading the way to lift demand for high-end DRAM chips.
Although Hynix has been known to produce more premium DRAM chips at the request of its biggest overseas clients, the chief executive declined to unveil the names citing the sensitivity of the issue.
``Unfortunately, Hynix hasn’t received official approaches from companies who want to buy in,’’ Kwon said when asked by any update on the sale of its stakes.
Over the ongoing legal fights with U.S.-based technology licensing company Rambus the CEO said, ``Hynix will be more active to speed up negotiations with Rambus.’’
Hynix has reported record profit for the last year driven by its stellar performances in the first half of 2010.