Analysts say strong leadership helps chipmaker improve financial conditions


Half a year has passed since Hynix, the world’s No. 2 memory chip maker, came under the wing of SK Group, the nation’s third-largest conglomerate.

Since then, SK Group has put Hynix under its tight control and sought to implant the conglomerate’s corporate culture at the chipmaker.

Last month, the renamed SK Hynix said it posted 23 billion won ($20.4 million) in operating profit for the second quarter, bouncing back into the black for the first time in four quarters.

Analysts regarded Hynix’s performance as an “earning surprise” as the once money-losing chip maker reaped the results at a time when the global semiconductor industry is suffering a long slump.

In addition, SK Hynix’s share in the DRAM market increased from 23.9 percent in the first half of this year to 24.4 percent in the second half, according to DRAMeXchange, a market research company.

SK officials and some analysts attribute Hynix’s financial improvement to group chairman Chey Tae-won’s strong leadership, growth strategy and rapport with Hynix employees.

“Chairman Chey’s love for SK Hynix and the employees’ passion have resulted in a positive outcome,” said James Kim, vice president of investor relations at the chipmaker. “We will give it our best for SK Hynix to become the true growth engine of SK Group.”

Other officials said the quick decision-making skills of SK chairman Chey and his focus on the semiconductor firm has contributed to the continual growth of SK Hynix.

Some analysts agree on the “owner effect.” “The strong leadership appears to have helped Hynix make a surprise earning,” an industry expert said, asking not to be named.

But he said it still remains to be seen whether the chairman will continue to provide “full support” to the chipmaker given that he is currently on trial for alleged embezzlement of company funds.

But SK Hynix believes it has gained the ground to launch next-generation projects.

With its new leadership, the country’s chipmaker has been speeding up in its mergers with foreign firms equipped with advanced technology and improving its earnings figures, according to SK Hynix officials.

“Notably, this year’s facility investment increased 20 percent compared to last year to total 4.2 trillion won, which enabled us to make big investments at the right time,” a company official said.

Last month, the company announced its completion of a new manufacturing line in Cheongju, North Chungcheong Province, declaring that it would transform it into a key global production base.

The new manufacturing line named “M12,” which was an addition to the plant’s existing M8 and M11 plants, will produce NAND flash and dynamic random access memory chips.

SK’s Chey, who attended the M12 line completion ceremony, said it will become an essential production base and the first to be established since the launch of SK Hynix.

The chipmaker will be able to produce up to 40,000 of the 300-millimeter wafers on a monthly basis.

In a related effort, SK Hynix also went forward with some overseas acquisitions for more competitiveness.

It signed a contract to acquire U.S. controller firm Link_A_Media Devices to strengthen its NAND flash sector as well as a California-based storage solution firm called LAMD to upgrade speed and reliability of its flash memory.

The firm also established a research and development center in Italy by acquiring Italian NAND flash developer Ideaflash ― a firm composed of 50 R&D experts with at least 12 years of experience ― for next-generation memory chips.

The acquisition moves take place after the company stated in April that it is currently developing its own controller chip for NAND flash memory to have it ready for production by 2014.

It also plans to inject about 50 percent of its 4.2 trillion won facility investment in NAND flash for the first time this year.

On another front, it also made public in June that it will jointly work with IBM to develop next-generation PC RAM chips.

“Any company could go forward with M&A or more investment, but we need the technologiy to beat our competitors. We need to become a technology-centered company that produces global products through research and development,” said Chey.

By Cho Ji-hyun (sharon@heraldcorp.com)