The Register-Guard: Home: City/Region
Hynix shutting Eugene factory
Wednesday, July 23, 2008
Hynix is closing its Eugene plant and will lay off its 1,113 employees over the next two months, sources within state government said Wednesday after the company's chairman met with top Oregon officials.
The Hynix chairman, Jong-Kap Kim, told officials that the decision was based on the semiconductor industry's move away from the dimension of silicon wafers used at the Eugene plant to make computer and consumer-product chips.
The cost of retooling the plant would have been $4 billion, state officials were told. Kim said he planned to meet with Hynix plant employees at 8 a.m. Thursday to describe plans for the plant's shut down, to be followed by a public announcement at 10 a.m.
The Hynix chairman said his company was looking into possibilities for reopening the facility in the future, most likely through a partnership with some other manufacturer, state sources said. Kim did not disclose what sort of products might be made, and it was unknown what employment levels or wages would result. If such a scenario doesn't develop, the plant will remain permanently closed and the equipment will be sold off.
Read more in Thursday's Register-Guard.
The Register-Guard: Home: Business
Hynix leader comes calling
By Sherri Buri McDonald
The chairman of Hynix Semiconductor, the South Korean parent company of the computerchip plant in west Eugene, will be in Oregon to meet with state and local officials today amid rumors that changes may be in store for the local plant.
Hynix Chairman Jong Kap Kim is scheduled to talk with Gov. Ted Kulongoski, Eugene Mayor Kitty Piercy and University of Oregon President Dave Frohnmayer in separate meetings during the day, local Hynix spokesman Bobby Lee said Tuesday. The meetings, which Lee had described last week as a “meet and greet” session, could turn out to be more than that, according to an e-mail from the mayor.
Lee said on Tuesday that he didn’t know what would be discussed.
Rumors about the future of Hynix’s Eugene computer chip plant — everything from closure to converting the facility to make solar cells — have been swirling for months.
The rumors had reached such a fevered pitch that last week Eugene City Councilor Bonny Bettman forwarded an anonymous e-mail speculating about imminent layoffs at Hynix to city officials and asked if there was any veracity to the e-mail’s claims. And if so, she wrote, what would be Hynix’s obligations regarding reimbursement of tax breaks?
Lee said he had no comment about the anonymous e-mail.
Piercy recently e-mailed this response to Bettman’s query: “I have heard rumors and asked some questions. Hynix has been experiencing some challenges and some sort of change may be coming — not necessarily a bad one. I will know more after I have the opportunity to meet with them and that is scheduled soon.”
When asked by The Register-Guard what sort of change might be coming at Hynix, Piercy responded via e-mail: “I don’t (know) yet. I look forward to meeting with the Chairman of Hynix to hear from him any news regarding their future here in Eugene. The company has been a huge part of our community and our economy for a decade, providing good jobs for hundreds of people. I know these are complex economic times.”
The company is a major employer and taxpayer in Lane County. It has an annual payroll of $62 million and 1,113 employees, including about 100 Korean nationals, Lee said. Three hundred contract employees also work at the site, he said.
It is far and away Eugene’s biggest taxpayer, paying $4.47 million in property taxes in the 2007-08 tax year, according to county tax records.
Hynix has received a total of $66.86 million in tax waivers under the state’s enterprise zone property tax program since the 1996-97 tax year, according to county tax records. Over the same period, those records show that Hynix has paid $56.55 million in property taxes.
Hynix Semiconductor is the world’s second-largest manufacturer of dynamic random access memory, or DRAM, which is used in computers and other consumer products.
The world’s DRAM manufacturers continue to churn out more and more DRAM units, but prices are way down.
World DRAM revenues are estimated at $28.3 billion this year, down 13 percent from last year, according to IC Insights, a semiconductor market research firm based in Scottsdale, Ariz.
The Eugene factory makes computer chips from 8-inch, or 200-millimeter, wafers. It’s more cost-effective to produce chips on 12-inch, or 300-millimeter, wafers, which are about the size of a medium pizza.
In the next two years, virtually all producers of commodity DRAM will be using 300-millimeter wafers, predicts Trevor Yancey, IC Insight’s vice president of technology.
“So that means you either convert your older DRAM fabs (factories) to other products, or sell them, or shut them down,” he said. “We don’t have any insight on what Hynix may be thinking to do on the DRAM fab in Oregon. I’d think their best bet would be to convert it to produce something else.”
Last month, Hynix bought a controlling stake in Siliconfile Technologies Inc., a South Korean maker of image sensors, which are used in digital cameras. The sensors convert optical images into electric signals.
“Quite a few DRAM manufacturers have converted wafer fabs to image sensors because the processes are similar,” Yancey said.
But a lot of companies have entered that business — perhaps too many, and no one is really making any money on it, he said.
As for solar panels, Yancey said, “solar is kind of a buzzword right now, so I think that every company is taking a look at that market because the growth is there.”
But again, he said, “it just seems like there’s too many companies getting involved there.”
Yancey said he wasn’t sure what to make of the Hynix chairman’s back-to-back meetings with Oregon officials.
“I guess it’s possible they would be considering building a new (300-millimeter) fab at that site,” he said, adding that Hynix’s closest competitor Samsung last year opened a massive 300-millimeter fab in Austin, Texas.
“Either that, or they’re looking to do something kind of major,” Yancey said. “If they were just going to convert the fab from DRAM to image sensor, I don’t think that would be a big deal.”
Then again, he said, “it may just be a meeting.”
Sherri Buri McDonald can be reached at (541) 338-2367 or at email@example.com
Copyright © 2008 — The Register-Guard, Eugene, Oregon, USA
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