Updated: July 18, 2001 10:05 a.m. EDT Text Only | User Agreement | Business: Hynix Semiconductor to suspend production at Oregon plant

By SOO-JEONG LEE, Associated Press

SEOUL, South Korea (July 18, 2001 6:55 a.m. EDT) - Pressured by falling chip prices, South Korea's Hynix Semiconductor Inc. said Wednesday it has decided to suspend chip production for six months at its plant in Eugene, Ore.

Hynix, formerly known as Hyundai Electronic Industries, is the world's third-largest memory chipmaker after Samsung Electronics Co. of South Korea and Micron Technology Inc. of the United States.

In a statement, Hynix said it was facing "the worst year ever for the global semiconductor industry" and would temporarily shut its Eugene facility.

All but 200 of the 800 Eugene plant employees will be laid off during the period but will be rehired, the company said. Those who will stay throughout the transition are researchers, technicians and managers needed for the upgrade.

The Eugene plant is Hynix's only overseas facility. Hynix said it has no plan to further cut production at its domestic plants. But company spokeswoman Kang In-young said: "Any future decision will depend on the market situation."

The Eugene facility produces 16 percent of Hynix's total Dynamic Random Access Memory, or DRAM, chip wafer output and over 50 percent of the company's 64-megabit DRAM chips.

During the suspension of production at the Eugene plant, Hynix said it plans to invest $150 million to upgrade its facility from 64-megabit DRAMs to 256-megabit DRAMs.

Hynix's decision came amid moves by other global competitors to cut costs by reducing production and realigning management in the face of dropping chip prices.

Samsung Electronics, the world's No.1 DRAM chip maker, said it was not considering production cuts. But it said it has plans to realign its products, increasing 256-megabit DRAMs and cutting back 64-megabit chips.

Prices for 64-megabit DRAM have fallen well below $1, a price industry officials say is barely enough to cover production costs. At this time last year, the 64-megabit DRAMs sold for $9 each.

In another cost-saving move, Hynix announced early this week that it will move its sales and marketing headquarters from Seoul to the United States.

The company will use its business operations in San Jose, Calif., to focus on customers including Hewlett-Packard and International Business Machines.

Most of Hynix's chip customers are based in the United States.

-- Guy Daley (guydaley1@netzero.net), July 18, 2001