Hynix to Sharply Cut Capex Spending
Staff -- Semiconductor International, 4/21/2008
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The CEO of Hynix Semiconductor Inc. (Ichon, Korea) told Bloomberg News that Hynix is considering cutting spending in the second half of this year by as much as 1 trillion won ($1B), a move that was applauded by analysts as a necessary step toward restoring a balance of supply and demand in the DRAM sector.
According to the Bloomberg report, Hynix CEO Kim Jong Kap said, “We are thinking about reducing capital expenditures by about 1 trillion won, but the actual amount will be decided in the second half. We expect a recovery in the second half.”
The Hynix disclosure comes shortly after Gartner Inc. (Stamford, Conn.) forecast on April 16 that DRAM vendors may cut spending by nearly half (47%) this year, a $10B reduction. Klaus Rinnen, in charge of Gartner’s semiconductor manufacturing research group, said, “The long-expected cutbacks in DRAM spending have materialized. While it might sound harsh, those cutbacks may be what is needed to get DRAM supply back to where it should be.”
Lee Seung Woo, a semiconductor-industry analyst at Shinyoung Securities Co. (Seoul, South Korea), told Bloomberg that the Hynix reduction is “just what the industry needs because overinvestment at this point will only delay a recovery.”
Gartner predicted last week that Hynix would spend ~$2.93B this year, down 42.4% from the $5.1B invested last year. Samsung Electronics Co. (Seoul, South Korea), the largest DRAM vendor, plans to spend ~$7B this year, according to Gartner, a relatively small 6.3% reduction.
Hynix said in February that it planned to spend 3.6 trillion won in 2008, 2 trillion of which would be used in the first half, so a 1 trillion won reduction would pare second half spending to the bare minimum.
