Hyundai is to buy the semiconductor arm of LG Electronics, casting doubt over the future of new factories being built by the pair. Hyundai's plant in Oregon is scheduled to begin shipments by the end of the year and LG Semicon has a #1.2 billion plant under construction in Wales, which is supposed to begin shipping late next year. Fellow semiconductor manufacturers Mitsubishi and Hitachi have both shut factories in the past week, blaming the market glut in chips and resulting pressure on prices. LG Semicon claimed in a statement that the merger is "part of a major shake-up of business in the wake of the Far East financial crisis and the worldwide slump in the semi-conductor market." Both companies refused to comment on the future of their businesses until the deal is finalised. Clive Longbottom, strategy analyst at research firm CSL, believes the deal will make the new company the second largest semiconductor business worldwide with a 17% market share. Samsung leads the market with a 19% share. A Hyundai spokesman said: "The economic crisis in the Far East is forcing companies like ourselves together as nobody is making any money. The (merger) situation is complicated for several reasons; it is primarily a management issue of who will take control of the new company and what factories should be kept. Also, Hyundai and LG Semicon make the same product but with different technologies, posing the question of whose technology should be kept and whose shelved." Longbottom added: "They're all in a brand new ball park - the chip side of the business has traditionally been cash rich but now (semiconductor manufacturers) are having to merge just to meet costs. Memory has gone up, monitors will be next, and eventually we will see cartel pricing as seven or eight of the largest manufacturers pump up prices to survive." Hyundai Electronic's largest business is the Semiconductor Division which is responsible for the sale of memory chips.
Semiconductor factory closures
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