Hynix to gain $300 million from new China chip joint venture

The move highlights efforts by DRAM makers to raise cash amid one of the worst DRAM downturns ever

Hynix Semiconductor plans to raise some much needed cash from a joint venture in China to assemble memory chips.

The South Korean company said it will sell chip production line equipment to China's Wuxi Industrial Development Group for US$300 million as part of their agreement. The joint venture will assemble chips made at nearby Hynix-Numonyx Semiconductor.

The venture is "part of its efforts to boost financial efficiency," Hynix said in a statement.

The move will also help Hynix lower production costs, it said.

It highlights new attempts by DRAM makers to raise cash amid one of the worst DRAM downturns ever. DRAM prices started falling two years ago amid a chip glut caused by gleeful factory building during good times and remain too cheap to profit from.

The global recession further hurt DRAM prices by hitting sales of the product most of the chips go into, PCs.

Global DRAM revenue plunged 41 percent year-on-year to $3.6 billion in the first quarter, according to Gartner, the lowest revenue figure since the fourth quarter of 2001.

DRAM makers have already tried several ways to shore up revenues, including closing old factories, temporarily shutting down production lines and slashing salaries.

Despite their efforts, chip prices remain low. German DRAM maker Qimonda filed for bankruptcy protection early this year and other companies are expected to follow.

Taiwan's government continues to work with some of its DRAM makers to figure out ways to keep them afloat.

Hynix's new venture with Wuxi Industrial will provide chip assembly services for the NAND flash memory chips and low power mobile DRAM chips made in Hynix-Numonyx factories in Wuxi, China.

Hynix-Numonyx Semiconductor started production in 2006.

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Dan Nystedt

IDG News Service
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