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Hynix plans sixfold increase in equipment budget

Bucks the industry trend - and then some

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Ailing chip maker Hynix has said it will spend more money on new plant next year - despite the fact that many of its rivals are cutting their 2002 equipment budgets.

Hynix said it is considering a plan to raise capital expenditure by 500 per cent next year. The increase, to $935 million, is part of the company's re-financing package and will have to be approved by the company's numerous creditors.

This year, in the ten months to the end of October, Hynix spent just $143 million on new kit.

Hynix is clearly looking to a major retooling of its product lines next year, replacing the older fabs that it is currently attempting to sell off. The company's strategy would seem to centre on an all-out drive to pitch it as a leading supplier of cutting-edge fabrication technology.

Which isn't, of course, going to go down too well with its rivals, many of whom are already moaning to the World Trade Organisation that Hynix's rescue plan contravenes the body's regulations on government subsidy.

Hynix's competitors will also see the increase in spending in contrast to their own plans to cut capital expenditure next year, or at the very least maintain parity with 2001 levels. Hynix's nearest rival - geographically speaking - is Samsung, which, according to a Merrill Lynch report, will cut its own capital expenditure by around 33 per cent to $2.3 billion, down from this year's $3.4 billion. ®

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