The world’s #2 memory-implemented chip maker, Hynix Semiconductor said that it will hike contract prices for computer memory chips by about 15 percent in June. They will raise prices by about 15 percent this month, a similar level seen in May and April. Also, they are talking to bigger clients about narrowing the differentiation on a percentage increase level and the final decision will be fixed by the second week of the month. Chip manufacturers usually negotiate their prices with PC set makers twice a month.
Kwon Oh-hyun, CEO of the world’s biggest memory chipmaker said that his company will be more aggressive spending 7 trillion won on the memory business this year. Samsung took up to 30 percent of the global DRAM share in terms of sales in the first three months. Hynix trailed up to 18.6 percent and Japan’s Elpida with 14.5 percent over the same period. This is according to data from iSuppli. However, bigger chip manufacturers are busy raising their contract chip prices in the belief that prices will recover due to investment spending cutbacks and increased demand in the future of new school year and the year-end shopping season.
A Hynix official said that this year’s recovery my not be as quick as in previous years because the global chip industry should be in a demand and supply balance by the third or fourth quarter. While Samsung has raised chip prices by 5 percent in early Many and was known to implement a similar measure in June. Elpida plans to raise more money to its customers for more profitability. The Asia’s biggest on-line trading site DRAMeXchange, gave an average contract price of the industry’s mainstream 512-megabit double-data-rate-two chip rose 6.6 percent.
Chipmakers had invested heavily in new facilities in 2005 and 2006. They are hoping to gain more market share with higher expectation of Microsoft’s Window Vista operating system. However, higher speculations about technical flaws in the system forced PC makers to avoid releasing such sets with the new computing system. From this, chip prices have fallen almost 90 percent since 2007. This dragged down the profitability of chipmakers to below manufacturing costs. Because of this dilemma, Hynix is attempting to solidify a strategic partnership with Taiwanese chip manufacturers to a bid to cut costs. Recently, the government gave approval to transfer its distinguished memory chip processing technology to Taiwan’s ProMOS technology. From this approval, ProMos will start using the 54-nanometer technology owned by Hynix on a foundry basis to make 12-inch chips by late 2008. Samsung and Hynix had been in this “verbal fights” that saying Hynix is leaking technology to its competitors.
Personal Opinion
The way Hynix shared their technology to a Taiwanese company was a hug mistake they have made. I understand why they reacted in such way but sharing information and technology to other country is dangerous and can be a threat in the future. The reason is that there are many cases of sharing technology that ended up defeated by other rivals. This is how Asian companies grew from the influence of western technology. I would prefer to share it with domestic firms instead of firms outside country. Even though Hynix’s greatest competitor is Samsung, they should have figured out different strategy increase their profit.
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