Exclusive Hynix plans to invest $8 billion by 2012

By Kim Yoo-chul

Staff reporter

Hynix Semiconductor, the world's second-biggest manufacturer of dynamic random access memory or DRAM chips used in traditional PCs, plans to invest up to 9 trillion won ($7.94 billion) in its business by 2012, according to an internal document.

The move is expected to intensify competition among chip makers to gain a bigger slice of the post-crisis market as most players are planning to boost their investment in tandem with the global economic rebound.

According to a 24-page document, which was exclusively obtained by The Korea Times, Hynix aims to increase its sales by 20 percent to 12 trillion won by 2012 from this year's target of 10 trillion won through its investment, which it believes will boost the firm’s global market share to 25 percent.

The document, titled "Mid-Term Strategies for Financial Soundness," said that the chip industry will continue its bullish trend down the road, forecasting that more companies will join in an uphill battle to boost capital spending in line with the recovery.

The large-scale investment plan comes two months after Kwon Oh-chul, chief executive of the chipmaker, hinted at the possibility of expanding its spending from an earlier projection of 2.3 trillion won in late March.

Under the new plan, the company has earmarked 2.5 trillion won for this year, 3 trillion won for 2011 and 3.5 trillion won for 2012.

"The combined investment will make it possible to increase our global DRAM share to 25 percent and NAND-type flash memory share to 20 percent by 2012," the document said.

Hynix aims to achieve 12 trillion won in sales in 2012 with an EBITDA (earnings before interest, taxes, depreciation and amortization) of 6 trillion won ― for this year it is targeting a 10 trillion won in sales with an EBITDA of 5 trillion won.

The previous record sales figure clinched by Hynix was 8.6 trillion won in 2007, the year when the global semiconductor market remained strong.

The company also plans to improve its financial soundness by reducing debts and increasing cash reserves.

To that end, it plans to reduce its debt ratio below 20 percent by 2012, while securing 4 trillion won in cash. Currently, the firm sits on 1.5 trillion won in cash, and plans to allocate 2.5 trillion won in earnings in the coming quarters.

The document also revealed that the firm is considering stepping up efforts to enhance its contract-based "foundry" business as a long-term growth strategy to compete with Taiwan’s foundry giant TSMC.

"Foundry" is a manufacturing process, which has widely been adopted by chipmakers to save skyrocketing costs of research and development.

Hynix is now on sale. Its creditors-turned-shareholders, who rescued the company after it almost collapsed in 2001, have failed to find a buyer for their 28 percent stake earlier this year, amid a then-weak outlook for the company. In March, they opted to sell 6.67 percent of their stake in a block sale instead.

Uphill Battle

The Hynix capital spending plan comes as the global chip sector has shown signs of turning around since last year on the back of rising demand for consumer electronics gadgets from China and increasing sales of memory chip-embedded digital devices such as smartphones.

The chip industry has stayed in the doldrums over the past several years, and manufacturers scaled back capital spending due to sluggish demand.

With a pickup in demand, leading semiconductor manufacturers are speeding up their move to increase their spending to expand production capabilities to meet this.

Samsung Electronics, the world’s top vendor of memory chips, will announce its biggest ever investment plan in a single year, today, in a bid to solidify its leading position in the industry.

Analysts expect the capital spending to reach up to 20 trillion won, which will be invested in memory chips and LCDs.

Japan's Toshiba is also expected to join the moves to increase production capacity.

Hynix trails Samsung Electronics in the global DRAM memory sector, while it also ranks No. 3 in the world in NAND flash memory chips, used in products such as digital cameras, music players and smartphones.

Hynix, which supplies flash memory chips to Apple for its iPod and iPhone products as well as mobile DRAM chips for the iPad, is competing with Japan’s Toshiba for the second position in the global market for NAND chips.

The company posted a record profit of 817.2 billion won during the January-March period compared with a 1.19 trillion won loss a year earlier as demand for PCs and a shortage of chips drove up prices. It was the biggest profit since the fourth quarter of 2006.

Citing data from research firms, Hynix expects the global revenue for DRAM chips, which temporarily holds data and helps computer processors run multiple programs simultaneously, to reach $25.3 billion this year and to rise to $30.4 billion in 2012.

However, there are concerns that chipmakers may face a backlash from their aggressive drive to boost investment as such a move can result in another oversupply, which will deteriorate their profitability over time.

하이닉스, 2012년까지 반도체 9조원 투자

하이닉스가 2012년까지 반도체 부문에 총 9조원을 투입, 사상 최대 투자를 단행한다.

이는 향후 3년간 전세계 반도체 시장이 호황기를 구가할 것으로 예상되면서 메모리반도체 시장에 대한 지배력을 강화한다는 전략에 따른 것이다.

코리아타임스가 단독 입수한 내부 문건에 따르면 세계 2위 D램 메모리반도체 업체인 하이닉스는 2012년까지 총 9조원 (올해 2조5천억, 내년 3조, 내후년 3조5천억)의 시설투자를 하기로 결정했다.

상반기 이후 반도체 수급이 공급 과잉으로 전환될 가능성이 제기되고 있으나 경기회복세에 따른 꾸준한 수요 증가로 하이닉스의 올해 매출 또한 사상 최대치인 10조원에 달할 것으로 전망된다.

하이닉스가 기록한 연간 최대 매출은 2007년의 8조6천억원이다. 하이닉스의 작년 연간 매출은 7조9060억원 이었으며 2008년에는 6조8180억원의 매출을 올렸다.

D램 가격 상승 등 시황개선과 맞물린 자체 경쟁력 강화 등에 힘입은 실적 호전세를 앞에서 하이닉스의 내년 매출은 올해보다 10% 상승한 11조원, 2012년에는 12조원에 달할 것으로 파악됐다.

투자가 완료되면 하이닉스의 글로벌 D램 점유율은 25%을 넘어서고, 낸드플래쉬 점유율은 20%를 상회할 것으로 전망된다.

아울러 1조5천억원 선인 현금보유고를 2012년까지 4조원으로 늘릴 계획이다.

시황 회복과 더불어 생산성 향상 활동으로 하이닉스의 순차입금 규모는 2012년 20% 이하 수준으로 떨어질 것으로 예측된다.

또 매년 매출의 절반 수준의 에비타 (EBITDA. 감가상각 및 법인세 차감 전 영업이익)를 창출해 재무 건전성을 대폭 개선하는데도 역량을 집중할 방침이다.