US government could put spanner in DRAM works

Questions linger over whether IMF money affects LG-Hyundai deal

The merger of LG Semicon and Hyundai's chip business will make it the second biggest DRAM company in the world after Samsung. But if the IMF's funds are used to prop up the Korean economy, the United States is likely to respond negatively, according to a senior semiconductor analyst at Dataquest Europe. Analysing the events of the last six months, Richard Gordon said that LG giving away its semiconductor division to Hyundai meant the shape of the DRAM market had changed drastically. Now, Samsung will be number one, Hyundai will be number two, Micron number three and NEC number four. The other players in the market are way below the top four, he said. Gordon said: "The two companies [LG and Hyundai] were forced together by the government and neither was very keen. They reluctantly went down the route of using a third party [ADL] and hoped the problem would go away." He said that LG did not like the solution Arthur D Little proposed but the government said, 'thou shalt'. Much of the discussion was down to politics, said Gordon. They thought the DRAM market was going to get better and so imagined they would reap the results. Gordon said: "Hyundai is number two now, but two and two don't always make four. The US government is concerned about whether IMF funds are being used to prop up the [South Korean] economy. It will be interesting to see whether IMF money is used in that way." ®

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