Hynix’s crisis-solving processes and promotion status
Micro Finance
Minyoung Park Keio University
Economics
Junior
Dongkyun Park Hanyang University
Mechanical Engineering Senior
Members
Minyoung Park Keio University_ Economics_ Junior 81)8035983769
Jumpout_7@yahoo.co.jp
Future Career Plans: plan to enter the world’s famous consulting company after studying
Figures and Econometrics in Japan. Will be a promising consultant. Continue to study on
national and international marketing strategies.
Dongkyung Park Hanyang University_Mechanical Engineering_Senior 01083842475
Pdk190@hanyang.ac.kr
Future Career Plans: want to be a Project Manager(PM). Continue on Major studies
(Mechanical Engineering) as well as researching markets and their marketing strategies.
2
<<Index>>
[Executive Summary]
[Note]
- Why Hynix
-Reasons and prospects of this research
[Hynix]
- Definition of Hynix
- Status of Hynix
[Hynix’s crisis and their solutions]
-Hynix’s crisis
-Analyzing causes of crisis and their loss
- Solutions of Hynix
[Future direction proposals- the need for promotion]
-Receiving spotlight
-Lack of promotion
[Appendix]
-Thanks
-Thoughts of the members
-References
3
[Executive Summary]
Hynix Semiconductor Inc. (“Hynix) is the corporation originated from Kukdo
Construction in 1949 and, before reaching its present form, merged with LG
Semiconductor Co., Ltd. in 1999 after changing its company name to Hyundai Electronics
Co., Ltd. Hynix is the second biggest supplier of memory chipmaker behind Samsung
Electronics and it occupies 64% of dynamic random access memory (“DRAM”) market in
the world with the top-ranking semiconductor supplier Samsung Electronics in South
Korea. Hynix had been faced with a serious financial crisis from IMF period in 1997,
Merger and Acquisition (M&A), September 11 attacks, etc., but it accomplished to be the
second-largest in South Korea and the world’s eighth largest semiconductor company.
Since Hynix is the B2B Company and does not sell products directly to the customers
while Samsung Electronics is widely open to the public, expanding their businesses in
various fields, Hynix had been left in the dark when it comes to the “popularity.”
Here, we are going to analyze and observe the crisis management, marketing and PR
strategy of Hynix which opened up new Korean Electronic market and became one of the
major semiconductor production centers in the world.
[Note]
「(…) The technology in America, Japan, etc. is advanced in that they plan by computers,
developed nanotechnology and already entered into the completely automated step. In
comparison, Korean technology is only limited to the simple functions and low-grade
articles technology even though they keep their basic planning ability. They are also
behind the mass producing technology. This is because not only the government but also
the companies that are not interested in investment.」 It seems that there are many
special terminologies, but they are all called for semiconductors. Even though the two
largest semiconductor companies in the world, Samsung and Hynix, are located in South
Korea, those sentences above are pointing at reality of South Korea beyond U.S. and
Japan. They seem to be rather difficult to understand, but they were reported in a
newspaper in June 1983 when Hyundai Electronics was just launched. That was such a
dark age, but Hyundai Electronics developed SDRAM and took place among the
technically advanced countries. In 1950s, one Asian who dreamed of building a
transistor factory memorized all the assembling methods, wandering American factories,
to introduce the new technology from America. He is Masaru Ibuka who established Sony
Corporation, Japan’s best-known Electronic Company, and served as a president of Sony
overcame the obstacles from being a developed country among developing countries.
After Korean business groups felt their crisis to Japan’s advanced technology and
repeated imitating and creating, they released many products named by 「the world’s
first」and succeeded entering into the top 10 list. In this report, we are going to describe
the reasons why we chose Hynix as a research subject and the contents briefly.
4
Why Hynix
-the reasons and prospects of this research
There are two reasons of choosing Hynix as a research subject. The first reason is that
Hynix had faced crisis in sales due to their financial loss, but they finally took world’s top
level in Semiconductors. The second reason is that we wanted to release how Hynix
promoted to the public and if they are still promoting their brands actively. Hynix faced
the biggest crisis when merging with LG Semiconductors, but they finally overcame all.
Our team is going to research their sole crisis management. Considering the efforts of
some similar corporations like Samsung Electronics or Dusan Infra Core, Hynix needs to
promote themselves more in the future. Now, our team is going to focus on the increasing
necessity in marketing and propose some proper promotion methods to improve their
brand image.
In other words, our team is going to suggest solutions and observe these following two
points:
First, we will analyze their crisis management.
Second, we will find their promotion history from their period of Hyundai Electronics,
point out some problems, and finally propose suitable PR methods.
The former will be at Chapter 2 [Hynix’s crisis and their crisis management] and the latter
will be at Chapter 3 [Future direction proposals-the need for promotion].
[Hynix]
「Korean Electronics including Semiconductor industries is now facing new period after
Hyundai Electronics which has been the center of public interest from Korean business
market formally launched. Since some existing electronic companies such as Gold Star,
Samsung, etc. seemed to accept this change without any wonder and Daewoo who took
over Home Appliances Department of Taihan Electric Wire Co., Ltd. is willing to compete
with Hyundai Electronics, the competition in this industry seems to be very competitive.
Especially investments in Semiconductors are expected to be increasing after Hyundai’s
participation. It is also expected to be the point of making developments.」 In February
1983, South Korea opened the start line at unexpecting situation. Including the major
group like Samsung, it was the very meaningful first step towards Korean semiconductor
industry.
-Definition of Hynix
Hyundai Electronics which is the origin of Hynix as an affiliate belonged to the biggest
business group, Hyundai, in 1981. Until 1980, Hyundai has done many-sided works,
especially focusing on the electronic industry. Hynix merged with Hyundai Electronics in
1983 and restarted as Hyundai Inc. Because Hynix started relatively late compared to LG,
Samsung, Daewoo, etc. at that time, Hyundai President Jung Ju-young directly led the
new business. Also, Hynix made efforts to found foreign corporation through the
development of strategy in compressive technology. The pre-investment strategy of Hynix
affected to the members at Hyundai and MORDERN ELECTRO SYSTEMS which is the
foreign corporation of Hynix located in Silicon Valley and it made possible for them to
5
provide high-tech products. As investment for the high-tech industry was expanded, the
firm established a huge factory in Ichon, Kyungki province and completed in October
1986. Since then, Hyundai Electronics had grown up as an oligopolistic company of
internal electronic markets after striving for manufacturing household electric appliances,
semiconductors, computers, etc. in the short term. Hynix chose capital as the origin of
their competitiveness, which became the significant factor for the flourishing
semiconductors and business environment of Hyundai groups. In 1987, the price of
semiconductors was raised sharply as U.S. brought antidumping lawsuits against Japan
and the Japanese companies were controlled by voluntary export restraint after the
semiconductors agreement between U.S. and Japan. As a result, semiconductor industry
started to thrive from the end of the year and Hyundai Electronics which entered into
semiconductor markets with LG semiconductors in the place of Samsung was flourishing
at that time. Thanks to the unexpected good result, Hyundai Electronics tried their
investment strategy and they could enter into the top 10 DRAM suppliers in the short
term, making a total profit of 1 trillion won in 1990.
As Big Deal was set up by the government, restructuring was carried out as a part of
Big Deal project on seven different types of business such as petro chemistry,
semiconductors, etc. whose profitability was weakened by oversupply from the
government’s overlapping investments in September 1998 since they have agreed on
five principles of corporate reform between government and major companies in 1998.
According to the evaluation of professional ratings agencies after the integration
announcement of Hynix and LG semiconductors in September 1998, LG group gave up
Semiconductors business in January 1999 and Hynix agreed to pay by installments 2.56
trillion won which is the purchase price of the shares of LG Semiconductor owned by LG
group, and they took LG Semiconductor over since October 1999. Finally in March 2000,
they changed their company name from Hyundai Semiconductor to Hynix Semiconductor
and separated themselves from Hyundai group. Figure 1 indicates the shares of Hynix on
19 August 2011, and their aggregate market price was ranked 22nd in KOSPI.
Figure 1
-Status of Hynix
Hynix is a B2B company. They increased business with foreign major companies,
supplying DRAM to world’s giant electronic firms such as DELL, HP, etc. Besides,
suppliers of NAND Flash are various throughout the whole IT consumer products, and it is
used for the worldwide PC and IT products like Apple. It also has customers from
manufacturing companies, memory module companies, and memory and memory card
manufacturers, etc.
Table 1 indicates the percentage of each market in semiconductor industry in the third
quarter of 2011, placing Hynix as the 2nd Korean company entered into Top 10 following
6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Top 20 in H1 2011
Intel
Samsung
TSMC
TI
Toshiba
Renesas
ST
Hynix
Micron
Qualcomm
Broadcom
AMD
Sony
Infineon
Freescale
Elpida
Fujitsu
NXP
UMC
Nvidia
$bn
23.8
16.7
7.4
6.4
6.3
5.6
5.1
5.0
4.3
4.2
3.5
3.2
3.0
2.9
2.4
2.2
2.2
2.1
2.0
1.0
Table 1
the 2nd ranked Samsung. Also, Hynix occupied 65% with Samsung in world’s DRAM
market in the second quarter of same year. Hynix is the expectative firm, developing the
world’s first 30 nanometer 4 GB DRAM. Table 2 indicates the rank of profits among the
DRAM manufacturing companies in the second quarter of the year 2011.
Table 2.
7
[Hynix’s crisis and their solutions]
-Hynix’s crisis
The reason of their crisis was, firstly, government’s political involvement and their
aftermath from the forced merger.
In other words, Big Deal that the government pushed in its early days and
uneconomical Big Deal started by officers who led the policies caused the crisis of Hynix.
The initial object of Big Deal that the government wanted to take Hyundai Electronics and
LG Semiconductor was to lead price increase and make more profitability. According to
the data which calculated the synergy effect incurred by the integration of Hyundai
Electronics and LG Semiconductors from government, they could save approximately
$6.2 billion over the next five years. Above all, either company does not need to establish
manufacturing factories and they could save $2.5 billion for investments, $2 billion for
R&D investments, $1 billion for management in this case. Expected effect seemed to be
huge when considering they were, moreover, expected to save $700 million for royalty
and patents. The point was that they could focus on the development of high value
products if the two were integrated. President at Hyundai Electronics, Choi Soo, said
「We can see one company released from all debts only by saving thir investments costs
7.5 trillion in five years.」 President Choi also said 「The synergy effect will hit their
stride from installing 256M DRAM in the next 2-3 years. Mutual complementary effect
was expected in technologies. LG had technologies for next generation high-speed
semiconductor industry, developing 64M DRAM semiconductor, and Hyundai held a
dominant position in mass semiconductor industry and succeed in developing trial
products for 256M synchronous DRAM. They have the semiconductor technology if they
compound each other. It is estimated to save as much as $6.2 billion over the next five
years by saving fee from research and development (R&D), sales management, antidumping duty, and royalty. The government took the lead in Big Deal with these reasons,
but this Big Deal finally came to fail. The debts in Hynix burdened by 4 trillion won debts
of LG Semiconductor were sharply increased to 15 trillion won. Also, Hynix
Semiconductor increased capital by issuing new stocks, and issued company stock in
order to pay 2.56 trillion won for LG semiconductor’s proceeds from the sale of their
products. Hynix repaid the debts with their money gained from their boom period 2000s;
they were still cornered in the financial crisis since their debts were so large. Since their
weakening was accelerating and they had the fragile structure in external stimulation,
they faced financial destruction because of their DRAM price after 2000. The decline was
the reason of. One example of the second reason is the slump in DRAM prices after
2000 and it was the most immediately affected reason for Hynix’s bankruptcy. The
reason why Hynix underwent a liquidity crisis in two months after they raised $1.25
billion last June was, in fact, because their semiconductor prices had dropped
significantly and unexpectedly. Having a liquidity crisis in two months after obtaining 1.6
trillion won for recapitalization (December 1998: 4.6 billion won, June 1999: 1.15 trillion
won) also meant the slump in semiconductor prices. Since 2000 and the dropping in
semiconductor prices due to the recession in word’s IT industry continued over a year,
the economy in world’s semiconductor industry entered into the extreme state of
depression. This decreasing semiconductor prices continued from the end of 1990 until
the beginning of 2000. Semiconductor prices seemed to be increasing temporarily in
September 1999 due to the earthquake in Taiwan, but it decreased significantly from the
slowed demands for PC and the rise in output from makers at the end of 2000 when the
word’s recession started. In case of 128M DRAM, there were a 7.8% decline from the end
8
of July 2000 and a 21.7% decline from the end of 2000 at the end of September 2001.
World’s economy in semiconductor industry was in a period of boom and bust, but it is
now in a serious depression. The semiconductor markets in the world developed by the
expansion of PC market from 1992 to 1995 finally faced the recession about for three
years due to the stagnant economy and oversupply of semiconductors from 1996 to
1998. They were on the block again from 1999 to 2000 after passing their boom period
shortly for two year in internet and IT market. Semiconductor market in 2001 was
expected to be poor compared to the year of 1985 when a 20% decline resulted.
Especially the cycle of DRAM economy has a larger broad distribution than the
semiconductor market, and it gives more shock to internal semiconductor industry where
their memories such as DRAM are very dependent.
- Analyzing causes of crisis and their loss
The reason of the dropped semiconductor price was, firstly, the oversupply from their
overinvestment. The competition in equipment establishment hit their stride from 1999
to 2000. The competition in world’s semiconductor industry was expanded after passing
through three years of recession from 1996 to 1998. Especially in 2000, they invested
$6.40 million that is an increase of 86% compared with the previous year. There were 46% oversupply of demands in 2000 and 5-8% oversupplies in 2001 when compared to
the effect of invest in equipment from 1999 to 2000.
Secondly, there was the decrease in supply from the IT industry depression, and the
depression at the beginning of 2000s got worse according to the global financial
downturn and the poor demands accordingly. World’s economy growth rapidly slowed
with United States as the center from the 4th quarter of 2000, and went slow more clearly
passing through the middle of 2001. As the reasons of deepening economic recession of
late, there were three major unfavorable conditions such as the equipments and over
production, a drop in inventory reduction rate, economic recession, etc. And it was the
more serious situation than year 1985. In 1985, the economy struggled from over
production and a drop in inventory reduction rate, but they maintained the stable level of
3.7%. The world’s economic recession made reduction in IT investments and decrease
in consumption expenditure, and resulted recession in IT companies. 80 percent of
investment accounts in American enterprises were spent in IT industries, and the
investment growth rate was expected to decrease to 12.6% in 2000 and 1.9% in 2001.
Weakening consumers’ incomes from the deterioration of U.S. stocks is interrupting the
market recovery in the major consumption areas such as PC and appliances. The broad
slump in IT industry demands such as in PC, mobile communication terminal, network
equipment, etc. that is the major markets for semiconductors made the semiconductor
market worse.
Third, wrong management of chief executives of Hyundai Group was another reason. In
1998, Big Deal which can be considered as the Government’s representative structure
adjustment program after IMF period just started. Big Deal in semiconductors which was
accomplished despite the resistance from LG and politics in the name of enhancing
competitiveness and blocking the overlapping investments in Semiconductor industry
which is Korean main industry has increased DRAM market shares of Hynix, but took LG
Semiconductor’s debts in the end. After they succeeded in Big Deal, Hyundai sold all of
LCD businesses excepting semiconductors, reduced debts’ size, and promised to develop
Hyundai as the company specializing in semiconductor. However, the policies of them
9
who already acquired LG Semiconductor were directly opposite. They expanded
telecommunication businesses, tumbled the affiliated Securities firms within the same
financial group down into insolvent enterprises, and made minus debts.
Hynix was damaged by DRAM price plunge, and their profitability was extremely
lowered. According to the 1.4 quarter report that they released, 1.76 trillion won was
aggregated as the 1st quarter sales of Hynix Semiconductor and 70 billion won as their
operating profits. This result, compared to the 1st quarter of last year, shows that sales
and operating profits were reduced by 13% and 7% respectively. It also shows that there
was reduction of 14% and 7% each when they were compared to the 4th quarter of last
year. Especially in the 3rd quarter, headquarters’ business achievements recorded their
net loss as 1.62 trillion won and the extent of the loss was expanded from 1.55 trillion
won which was the record of the last 2nd quarter. That is, Hynix Semiconductor performed
the worst because of the extremely sluggish economy in Semiconductor industries during
the 1st, 2nd, and 3rd quarter of 2001
- Solutions of Hynix
Decision to take over
Hynix’s decision was to solve the problems through internal reconstructing.
Government and creditors completely accepted Micron’s one-sided requirement as it is
the only one alternative, entered into MOU in haste, and forced creditors meeting and the
passing from Hynix’s board of directors. However, Hynix refused to MOU conclusion and
decided to survive alone after their commitment discussed MOU contents and its
subsequent restructuring plan and found the serious problem. Since Korean companies
ranked the 1st and 2nd in the world’s DRAM market, they also expected the growing effect
in DRAM market. The consolidated company between Hyundai Electronics and LG
Semiconductor is going to have bigger size than world’s top Samsung Electronics. Korean
companies are going to occupy approximately 40% in the market and rank the 1st and 2nd.
Also, their increased market share was to enhance the initiative in Korean companies
when considering technical development and price decision. Hynix undertook Blue Chip
Project which realized high-tech manufacturing process at the smallest scale of
investment and made the products having large-scale manufacturing lines.
Also, in the world’s semiconductor history, they fulfilled in the fantasy of developing
number one new technology at the lowest costs by developing Chip Family Project at the
lowest costs, shortest term, and the first technology. Hynix reorganized export markets to
be upgraded from the insolvent enterprise which had abundant amount of debts to the
blue-chip companies, and operated the plants in America to avoid 30-40% taxes. Hynix
sent Korean employees to American plant and armed themselves with global
competitiveness, which became the driving force of the large manufacturing base. When
Hynix was in danger of bankruptcy from the astronomical deficit of 1.1 trillion won, they
judged this as unavoidable restructuring caused by the serious financial defects.
Reducing 10 thousand out of 22 thousand employees, Hynix carried out a large-scale
restructuring especially firing two thirds of executives. They also sold all of nonsemiconductors and non-memory business such as cell phone LCD monitor system RC
and concentrated only on semiconductors and NAND Flash business line. When
competitors invested 1.5 billion won for upgrading, Hynix researchers succeeded to
upgrade by effective research development such as renovating equipments all night. One
thing we can find through Hynix’s policies for revival is that their stabilized labor10
management relation was the only factor for them to overcome all the situations wisely
when they faced many obstacles. Semiconductor industries need investment accounts,
market volatility, have short product lifespan. Also, as the supply chain is complicated,
gaining visibility and maximizing profitability without the optimized supply chain
management system became hard. To solve these kinds of problems, Hynix
Semiconductor started to establish the planning system for each unit of the plant since
2003 and set up sales demands and payment management system. They also
established systems for each unit of plants, appointed model plants, and branched out
their business on 15 sites. They established not only the global production planning
system including the foreign production corporations (America, China, Taiwan) aimed for
the integration of information and visibility but also the integrated system including the
information of sales, manufacturing, and original prices. It made possible for
multinational corporations to observe each different circumstance of the entrants based
on the good resources and organization skills, accomplish competitive advantage with
proper strategies and business activities, and successfully go into many parts of the
world. Hynix opened their offices in India and Moscow in an effort to open new markets
and to keep up with the requirements of overseas customers with their strategies,
verifying portfolios to keep up to the broad range of demands that the global market
requires. Also, they started memory market for cell phones and digital home appliances
in earnest, revealing their joint development plans with M-systems in Israel for the next
generation fusion memory.
[Future direction proposals- the need for promotion]
-Receiving spotlight
Hynix is trying not only in semiconductor technology but also in providing environmentfriendly products. Hynix took its place as the world’s first affiliated company on May 2010,
participated in ‘Carbon Supply Chain 2010’ processed by Carbon Disclosure Project
(“CDP”) as a member of ‘CDP Supply Chain 2009’, and led the major Supply Chain’s
Carbon Disclosure Project. Hynix has the plan for expanding companies participating in
the Project. Jung Yun-young, director of environment safety group at Hynix, said “Supply
Chain’s acknowledgement, willingness, and practice are the opportunity and
competitiveness for all companies.” In fact, Supply Chain’s Carbon management has
became the main issue of business and the survey targeting 45 companies who joined
the project last year as a member of ‘CDP Supply Chain 2009’ showed that 56 percent of
those questioned are going to terminate future contracts with the companies who did not
satisfy the Carbon management standards and 6 percent of them have already
terminated the contracts. Also, some companies answered that they are going to include
the point on the contract that they are going to improve Carbon management. After
gaining the high-level evaluation and receiving the ‘Glacier Award' from CDP Korea, Hynix
was highly rated in 2008 for the estimation of CO₂ emission and business relations and
appointed as one of the best companies in Carbon Disclosure Leadership Index(CDLI).
Hynix is getting patents for DRAM, NAND Flash, MCP, etc as the eco-friendly products and
the companies in the same field are giving attention to Hynix’s next step.
11
-Lack of promotion
On the other hand, it is true that their promotion targeting the public has been weak
and the reason seemed to be because Hynix’s major products are beyond the whole
products like computer. Hynix has low level of brand awareness than their brand status.
Even though Hynix is a B2B company, they had improved their brand image by advertising
electronic devices such as electronic dictionary and cellular phone when they were a
member of Hyundai Group in the past. Also, heavy industries like Doosan Infracore are
developing their TV commercials. Hynix felt crisis about their current company image and,
on 9 July 2011, they restarted their advertisement through media in ten years. However,
some analysis showed that it could be the means to increase the value of company
images before their takeover. Ja-woo Koo, a researcher at Kyobo Securities Co., Ltd., said
“It could be regarded as the way of increasing the value of company as one inadvertently
gets suspected by others, overlapping the period of buyout.” and “Since they experienced
some tough times, however, it will be better to think in the way that Hynix is trying to
improve their brand image at the time when they are making profits.” Young-Chan Kim, a
researcher at Shinhan Investment Corp., explained “This advertisement was not made in
a sudden.” And “They chose advertisement as one of the solutions to overcome
economic crisis since they had problems with manpower supply and demand because of
their bad brand image.” Hynix who has been grown up described their power through
their commercial. Also, with the forest pictures, they showed Hynix’s win-win philosophy
with the old ages and the customers from the affiliated company.” Especially the last
scene showing Cheongju plant and Hynix members delivered the real aspects of Hynix
that the members work very hard from the front lines. Jeongsu Kim, promotion director at
Hynix, said “We started the advertisement, this time, to announce Hynix’s status not only
to the nation but also to the persons concerned such as stakeholders and employees
since Semiconductor has became considered as the key industry which is important to a
national economy. And we aimed to deliver Hynix’s philosophy and values through our
pictures, but not by the only one-time fancy ones.” Despite their explanation, it gives the
impression that they are not delivering their brand and image properly. First of all, we are
going to look at some advertisements of Samsung and Doosan Infracore.
Figure 2 is a part of TV commercial of Galaxy S2.
12
Figure 2
It is said that Hynix needs to promote their brand image more actively since Samsung
Electronics developed many-sided business not only in semiconductors but also in smart
phones, etc. Still, Hynix represents their image exactly by expressing their sophisticated
and advanced technologies as well as the images of their products.
13
Figure 3
Figure3 is the commercial of Doosan Infracore. Even though Doosan Infracore is in the
heavy industry making ship and forklifts, etc., they in such a new and striking way
included their own products in the commercial to improve their image.
14
Figure 4
Instead, Hynix(Figure 4) had rather simple pictures compared to those two companies
above by showing pine forest and Hynix plant. By this, people can expect Hynix as the
semiconductor-making company, but Hynix still need to supplement more in the sense
that they have lack of creativity which is the significant factor in IT industries.
15
[Appendix]
-Thanks to
We appreciate KIMF members nominating us for Top 10. It was a very meaningful time
to listen to Korean university students’ enthusiastic presentations. We shared marketing
case study, strengthened our weaknesses, and we built personal relationships as well.
Even though we did not succeed in entering the top 10 in rankings, we learnt a lot from
the case studies and presentations. We could learn new ways of research by attending
this presentation and we are going to try to make better presentation with this experience.
Once again, we appreciate KIMF members for giving us participation prize at this contest.
-Thoughts of the members
Dong-kyun Park: Hynix is now promoting their products by manufacturing and selling
memory semiconductors all over the world after passing through their depression period.
Also, they recently took second place in world’s semiconductor industry despite their
unfavorable conditions in world’s market such as DRAM prices dropping. They could
make a good result as now by the research of manufacturing process and supplier
facilities improvement study, and they are expected to make a precious result when
considering their R&D status, portfolio management strategy, etc.
In the long run, there will be no big problem in liquidating Hynix when it comes to their
M&A with other major companies and Hynix will make synergy effect by their enormous
investment of their funds.
Environment for semiconductor markets, as compared to their positive outcomes, is
rather pessimistic.
First of all, Hynix cannot avoid to face shrinking since Samsung Electronics, whose
market share is the number one in the world for their memory semiconductors, largely
invested in equipments and human resources development with their enormous financial
power. Hynix can also be in danger if they do not react as fast as the change speed of the
memory chip industry which repeats boom -bust cycles by periods.
In order to overcome a crisis in the short run, they should prepare plans for cost savings
in responding to the excessively dropped DRAM market price. Also, it is important to
invest radically and procure technologies in order to survive in Chinese market grown by
Samsung Electronics and low price policy. Hynix should keep their technologies, obtaining
their patents and not make any losses.
Hynix has grown rapidly with Hyundai group’s peculiar enterprise in its beginning period.
With their full of challenges, Hynix is now producing a remarkable accomplishment
despite the poor domestic environment. Other firms should let this be a good lesson by
clearly investigating this example.
Min-young Park: It was a good opportunity to analyze how Hynix overcame their
depression period. It was also a meaningful time to expand the knowledge and thoughts
of all participants who hope to go abroad in the future. This experience, I believe, will be
helpful for the small and medium-sized business as well to extend its business abroad.
This experience, for sure, will affect the students who want to introduce our national
brand, South Korea, to the world and inspire their patriotism.
16
REFERENCES
Hynix (http://www.hynix.com)
Ministry of Knowledge Economy (http://www.mke.go.kr)
E-daily (http://www.edaily.co.kr)
Hynix Annual Business Report (http://dart.fss.or.kr)
Sin Il Kang, The restriction of semiconductor industry and the problems in future
Yoon Jong Jang and Sang Yeon Lee, The Constitution change of DRAM semiconductor industry
and the problems of Hynix, (Monthly) KIET Industrial Economic Review, 2001.12
Dae Young Joo, The competition aspect change of the semiconductor industry and the trend of
workout, (Monthly) KIET Industrial Economic Review, 2002.11
17