Facing the worst year ever for the global semiconductor industry, hynix Semiconductor Inc (hynix) today announced plans to temporarily suspend production at its facility in Eugene, Oregon for next six months effective immediately today in order to fast-track its technology upgrade to produce a more competitive product.
During the production suspension, hynix will invest approximately $150 million to upgrade its Eugene facility to a more advanced technology which will allow hynix Semiconductor Manufacturing America (HSMA) to transition from producing 64-megabit dynamic random access memory (DRAM) chips on .22 micron geometric to 256-megabit DRAM chips at .16 micron, utilizing the company’s proprietary technology.
When production is resumed at the Eugene facility, it will be a much stronger and more competitive operation. Dr. Chong-sup Park, Chairman and CEO of hynix said, “The continued investment in the Eugene facility clearly demonstrates that we continue to be committed to both the facility and our core business as well as our loyal employees; the commitment is to ensure that hynix remains a cost leader in the industry. With this action, we are able to simultaneously achieve many objectives; taking significant DRAM capacity off line which demonstrates our leadership to improve the health and profit within the industry, reducing current operating losses in DRAM business and preserving significant cash for necessary investment in our future.”
Approximately 600 employees will be temporarily laid off during a six-month suspension of operations, effective today. HSMA will maintain the necessary work force to upgrade the facility during the temporary closure. Dr. Park expressed regret at having to take such measures, commenting on the poor market and the immediate consequences for many of the HSMA’s loyal employees. “The continued deterioration in the semiconductor market and, more specifically, the DRAM market has led us to review all of the hynix`s operations. While deeply regrettable, this action is necessary and substantially reduces the average unit cost of our output. Continued cost leadership is a goal from which we cannot waiver in our commitment to preserving and enhancing shareholder value. By the temporary suspension of production of this facility , we will be able to more quickly retool and upgrade our Eugene operation,” Park said.
No further cuts are planned, however, all operations are continuously under review to ensure that maximum efficiency is obtained at all hynix facilities. “With the current oversupply in the industry we believe that the only responsible action to take is to remove some capacity in the short term. While we alone cannot dramatically alter the supply situation in the market, this is a significant reduction for hynix. We know that our stakeholders appreciate that the actions we are taking are in the best interests of the long term success of hynix”, Park said. The Eugene facility produces 16% of hynix total DRAM wafer output and over 50% of the company’s 64 mg DRAM chips. “Such reduction in output will not have any negative consequences to our excellent customer relations as supply can comfortably be met without interruption through inventories and production from our other facilities”, Park said.
