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Analysts Hail Global Microchip Alliance By C. W. Lim
SEOUL, Jan 17 (AFP) - Asian analysts welcomed a landmark alliance between six top semiconductor makers to jointly produce next generation chips on Monday (Jan. 17), saying the pact would help reduce costs and create a new industry standard. Hideo Yamasaki, an electronics industry analyst at Fuji Research Institute in Tokyo said, "Simply put, domestic DRAM makers are more focused on reducing the business risk [in DRAM production] than making money. By coming together in a group of major manufacturers including someone like Micron Technology, makers can reduce business risks if the group's technology becomes a de-facto standard."
The alliance to develop new microchip technology includes U.S.-based Micron Technology Inc. and Intel Corp., Infinion Technologies of Germany, Japan's NEC Corp., South Korea's Samsung Electronics Co. and Hyundai Electronics Industries Co. Analysts in Seoul agreed that this alliance would be beneficial to the world's saturated microchip market, which has been in the process of a major restructuring. They also dismissed fears that the alliance would act as a global cartel that could force other producers out of business, although they admitted that smaller players in Taiwan and other countries could face some buffeting.
Chang Hwa-Jong, an analyst at KEB Salomon Smith Barney, said the move was rather aimed at creating a global standard for one-gigabit and four-gigabit next-generation chips. "What these major producers are trying to do is create a world standard for next generation chips so that overall research and development as well as production costs can be reduced. Varied standards increased prices, not only for producers, but also for personal computer vendors. So this will be a good move overall for the global industry," he said. He believes that this will put these six companies slightly ahead of smaller producers in the sense that they are setting the standard and not following.
Market investors received the alliance in a positive way, sending Samsung Electronics and Hyundai Electronics shares soaring in Seoul. Both Japanese and South Korean analysts said that Intel, the world's biggest semiconductor firm, which has a great influence on technical standards and prices, would lead the alliance.
For Japanese chipmakers, "the fastest way to reduce the business risks would be to simply withdraw from the DRAM business, but doing so would be too painful," Yamasaki said. An NEC spokesman in Tokyo said, "This is just the initial stage, as they've come together to work on distributing future memory technology. The companies will be coming together and pooling resources."
Choo Dae-Yong, at the state-run Korea Institute for Industrial Economics and Trade (KIET), said the alliance would play a "positive" role by accelerating industry standardization. "It will accelerate the market's standardization and cost reductions in developing one-gigabit and four-gigabit chips," Choo said. However, he said the alliance would be limited to research and development." In other fields, such as production and marketing, the firms will remain competitive."
Taiwan's leading Winbond Electronics Corp. said the alliance did not come as a surprise. "The costs for research and development for microchip technology are expected to skyrocket, so everyone is looking for partners to share such high expenses," said a Winbond official in Taipei. Winbond has been busy itself, having already formed partnership with IBM, Toshiba, and Fujitsu, he said
Newswires |
