SEOUL, South Korea Amid an ongoing labor dispute that could adversely affect global DRAM supplies, the South Korean government has put additional pressure on Hyundai Electronics Industries Co. Ltd. to complete its acquisition of LG Semicon Co. Ltd.
Government officials met with leaders of both companies and emerged with an agreement that requires Hyundai to hire all LG employees, and other measures. But the agreement apparently does not guarantee the jobs of the LG employees for seven years, which is what local unions had demanded. The labor dispute escalated earlier this week when a seven-day walkout by workers shut down all of LG's fabs in Korea.
A senior Hyundai executive in the United States said the company is eager to reach an agreement with LG so the two sides can begin developing a common market strategy. "We're very interested in getting this agreement signed so we can begin the integration process," said Mark Ellsberry, vice president of marketing for Hyundai Electronics America's semiconductor division (San Jose, Calif.). "Our feeling is that once the LG people see what our plan is, there isn't going to be any major concern. But right now we're not in a position to share that with them."
Ellsberry expects an agreement to be reached by mid-February. "There's a deadline of Jan. 31, and a lot of people thought we'd miss it," he said. "But the minister of commerce has reiterated his position that this get done. A lot of people paint this as a bad idea, but at the end of the day they have to give us some credit for trying to put together an entity that will work."
Buyers in the spot market, which LG Semicon supplies, are "edgy," said Paul Myers, DRAM commodity marketing manager for the American IC Exchange (Aliso Viejo, Calif.), an independent distributor. "Buyers are calling us every day to check the situation but so far haven't placed any pre-emptive orders."
Myers said AICE is seeing increased interest from OEM buyers in longer-term direct-purchase contracts with producers."I hear from a lot of semiconductor producers that they're being asked for contracts extending several months," Myers said."
Andrew MacLellan contributed to this story.