Most commentators regard Intel Corp’s expected investment in Samsung Electronics – reportedly said to be as much as $1bn – as a way for the US chip maker to reduce the likelihood of the Asian economic crisis resulting in a cutback in production of PC components that are vital to sales of its CPUs (CI No 3,352). Samsung produces 19% of the world’s DRAM supplies and any shortage of supply would hurt Intel’s sales as the company found out the hard way a few years back when it couldn’t sell microprocessors because there weren’t enough memory chips available. However Intel’s action may just be the tip of the iceberg as the Korea Herald reports 16 American vendors are talking with US financial institutions to enable Korean chip makers to continue investment in production facilities. Together with Hyundai Electronics Industries’ sale of its $775m Symbios Logic Corp unit to Adaptec Inc the moves are seen in part as a way for Korean chip companies to raise new funds to upgrade their 64-megabit DRAM lines, enabling them to double to 400 the number of 64-Mbit parts they can get from a single 8 wafer. Intel cannot afford to have the current business model of PC component supply upset as it moves to try and deliver PCs for under $1,000 and maintain its growth and profit levels. A sign that the Samsung conglomerate is casting a wider cry for help than inviting foreign investment in its technology business is the news that its Samsung Motors Inc group is also seeking a joint venture or strategic alliance with foreign car makers.
