Hyundai Electronics Co and LG Semicon have agreed to merge their semiconductor units, as part of a general shake up of Korea’s five largest conglomerates in a letter of agreement signed on Thursday morning. The new firm should have a 15% worldwide market share of the DRAM market. The move is the only semiconductor related part of a larger swapping of businesses by the big five Korean chaebols – LG Group, Daewoo, Samsung, Hyundai and SK – who agreed to merge major subsidiaries in a deal masterminded by the Federation of Korean Industries (CI No 3,475). Both have suffered huge losses. Hyundai, which currently has a 9% share of the DRAM market, had progressed further towards upgrading its manufacturing plants to sub 0.25 micron processes than LG. The combination will be able to compete more effectively with US DRAM supplier Micron Technology Inc, which recently bolstered its own operations with the $800m purchase of Texas Instruments Inc’s memory business (CI No 3,435).
