HYUNDAI ELECTRONICS SUCCESSFULLY ACQUIRES HYUNDAI SEMICONDUCTOR

Hyundai Electronics (CEO: Young-Hwan Kim) anounced on the 13th that it has launched “Gulliver Mate (Model Name: HGP-9900), the internet functioned-PCS phone with internet-exclusive web browser equipped and started supplying them with domestic PCS proprietors. On October 14, Hyundai Electronics Industries Co., Limited (HEI; CEO Young Hwan Kim) and Hyundai Semiconductor Group (former LG Semicon Co., Limited) finished all integration procedures and officially launched a new company. Hyundai Electronics Industries Co., Limited will be kept as the new company name. This merger has been a major part of Korea’s efforts to restructure the corporate sector. It is also likely to reshape the global memory chip market. This is why the recent M&A has received much attention in the international market as well. As the two companies successfully merge, Korea’s international credit rating will rise and Korean semiconductor companies will gain better positions in the world market. According to IDC, a global research institute of semiconductor markets, the new company will emerge as number one in the world’s memory chip market. Last year in 1998, HEI and Hyundai Semiconductor had already held 20.8% each of the world’s DRAM market. The new HEI is considered to have gained the most from the recent bullish semiconductor market. The two companies had pulled together to produce tangible results and early synergy effect. This is already taking place in some fields like R&D. Along with the booming market, efficiency attained from structural and personnel integration have facilitated the merger. Possible losses in sales due to fewer customers, highly skilled R&D resources, productivity, quality and management capacity were all kept at a minimum. The new management has three main objectives. First is to maximize return for shareholders by continuously renovating management and taking the lead in technology development. Second is to maximize satisfaction for customers, and third is to become the world’s leader of semiconductors and thereby maximize a sense of fulfillment to all company members. To this end, the new company will make the most of the combined R&D resources. It aims to lead development of semiconductor technology across the world, cut development time of new products and diversify product types. In addition, continuous efforts will be made to reduce chip size and strategically focus on core industries of the two companies. This will enable productivity to rise, production cost to fall, and improve overall profitability. Ultimately, plans are to establish a stable sales structure by exerting more leadership in the memory field and actively promoting its non-memory business. The new HEI believes that these strategies will enable it to become the world’s leader of semiconductors and bring satisfaction to all customers. Among the many strategies, full use of the strengthened R&D will probably show an immediate improvement in profitability. The newly integrated R&D is rated as one of the best in the industry, both in staff number and technology standard. The time required for development and release of a new product will be shortened by 6 to 12 months. The new product will enter into the market faster than those of other competitors and sell at high prices. Furthermore, chip size, which is an important cost factor, will be reduced 3 to 6 months faster than expected and thereby enhance profitability and price competitiveness. Korean semi-conductor companies promote mostly DRAM products and so weaknesses are found in the Non-DRAM sector. This will no longer hold true for the new HEI. The integration of Non-DRAM R&D, its following synergy effect, and plans to strengthen its non-memory division will bring about noticeable improvements. The new company also plans to revise its revenue structure by increasing Non-DRAM’s portion to 18% by 2001 from the current 7~8%. Future non-memory division will expand based on that of Hyundai Semiconductor, which holds competitive advantage. Revenue of Hyundai Semiconductor after October 14 will be calculated as a part of Hyundai Electronics’. The new company’s total revenue for 1999 is predicted at 6.4 trillion won. If the semiconductor market grows further next year as expected, the new company’s revenue from its semi-conductor business may reach 8 trillion won. The current CEO of HEI and Hyundai Semiconductor, Young Whan Kim, will take the position of CEO for the new company. The president of the Hyundai’s semiconductor group since last July, Sang Ho Park, has been appointed as the president of the new semiconductor division.