The merger of the semiconductor units of LG Semicon Co and Hyundai Electronics Co, agreed through a deal brokered by the Federation of Korean Industries earlier this month (CI No 3,489) is unlikely to go through without a battle, according to the latest reports from Korea. Hyundai is battling to gain a 70% share in the joint company, according to the Korea Herald, because it has a 9% world market share compared with LG’s 6.7%. Meanwhile LG is said to be worried about the position of its LG Electronics arm. The merging of DRAM business would place the combined company as the second largest supplier worldwide, after Japan’s NEC Corp. And while consolidation would make some sense, the joining of two very unprofitable concerns would result in massive combined debts, valued by the Herald at around $12bn. Clashing technologies, such as separate thin-film transistor liquid crystal display businesses, would have to be merged. And talks between Intel and LG Semicon over a possible $1bn investment (CI No 3,437) now appear to have stalled, says the paper. Timescales on when the match might take place are vague. The merger’s success, if it ever takes place, will be nothing short of a miracle, the Herald commented. Chip exports account for over one fifth of Korea’s exports. The other major Korean supplier, left out of the deal, is Samsung Electronics Co.
