Hynix to close U.S. chip plant for 6 months

Hynix Semiconductor is the former Hyundai Electronics Industries

SEOUL, South Korea -- South Korea's Hynix Semiconductor said it would shut a U.S. plant for six months Wednesday as the global tech downturn worsened.

Hynix is the world's third largest memory chipmaker, behind Korean rival Samsung Electronics and Micron Technology of the U.S.

Analysts said the move would have little impact on falling chip prices unless other big players did the same. Spot prices for 64-megabit chips have dropped below $1 from $9 a year ago.

Research firm Gartner Dataquest has forecast global dynamic random access memory (DRAM) chip sales this year will fall to $14 billion from $31.5 billion in 2000.

Toshiba, UMC announced earlier cuts

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"While we alone cannot dramatically alter the supply situation in the market, this is a significant reduction for Hynix," the company said in a statement.

Japan's top chipmaker Toshiba and Taiwan's United Microelectronics Corp recently announced temporary output cuts, but other makers have stood firm.

Hynix said it would immediately shut down its plant in Eugene, Oregon and layoff 600 staff for six months.

It said it would use the time to upgrade the facility, investing about $150 million to replace 0.22 micron processing technology for 64-megabit chip production with 0.16 micron technology for higher-performance 256 Mb chips.

"Hynix will be able to reduce losses from making some unprofitable chips," said Shim Yong-jae, an analyst at Good Morning Securities. "But its industry impact will be limited unless the move is followed by other majors in key products."

Second-quarter results out Thursday

Hynix shares jumped more than 10 percent in early trade, but shed the gains as tech worries persisted. At one point it touched 1665 won, below its previous day's close of 1685 won, before closing 0.3 percent higher at 1,690 won.

Hynix will report second-quarter earnings Thursday. Analysts expect it to post a loss before interest and taxes. It had earnings before interest and tax of about $53 million in the first three months of the year on sales of about $1.35 billion.

"I expect Hynix to post about 400 billion won in negative EBIT," said Chon Woo-jong at SK Securities. "Its net loss is likely to double (versus the first quarter) to more than one trillion won."

Hynix lost a net $448 million in the first quarter.

Last month, Hynix -- the former Hyundai Electronics Industries -- secured $1.25 billion via a global depositary receipt issue as part of a package organised by creditors to help it pay maturing debt.

Reuters contributed to this report.