LG Semicon and Hyundai to merge
Top five chaebols split businesses
The big five South Korean conglomerates (chaebols) have struck a deal in which they will swap businesses, including semiconductor manufacture. Hyundai and LG Semicon have struck a last minute deal to create a single chip firm but have not yet resolved their differences over who has the majority ownership.
That could be bad news for the UK. Hyundai had planned to open a chip fab in Scotland while LG Semicon has a factory in Wales. The Scottish fab could now be put on the back burner. The deal will be welcomed by the memory industry which has suffered for a year from a glut in product and a slump in prices.
The agreement will leave a Hyundai-LG Semicon company competing against Samsung. The world rankings for DRAM are now Samsung at $3.9 billion, Hyundai-LG at $3.3 billion, Micron-TI at $2.9 billion and Japanese company NEC at $2.5 billion The other elements of the deals between LG, Hyundai, Daewoo, SK and Samsung, will mean swapping industries in the aerospace, ship building, petrochemicals, power generation and oil refining sectors. No deal is yet struck in the automotive sector.
Roy Taylor, joint MD of DRAM company Vanguard in the UK, said: "Speculation will lead to price increases. People are looking for good news and will take advantage of this. Mergers and takeovers are not easy at the best of times, especially when they're not welcome. Customer service and R&D will suffer." ®