The secret of Hynix's revival after setbacks

The secret of Hynix's revival after setbacks

Despite the impact of the financial crisis in the past year, South Korean memory giant Hynix has remained unshakable in the global semiconductor market. Hynix, which nearly went bankrupt in 2000 due to lack of funds, has once again demonstrated its resilience in the midst of a sluggish economy. What is the secret to its recovery?

Hynix's revenue from July to September 2009 increased significantly by 26% compared with the previous quarter; operating profit was 209 billion won (about US$2.3 billion), and it turned a profit for the first time in 8 quarters.

Despite the unprecedented semiconductor downturn in the past two years, Hynix still invested 10% of its revenue in R&D. Even in 2008, when the economy was at its worst, Hynix still invested 10.8% of its revenue, or about 699 billion won, in R&D.

In early 2009, Hynix President Kim Jong-gap took the lead by cutting his own annual salary by 35%, freezing new recruitment, and giving all employees two weeks of unpaid leave to overcome the recession. However, Hynix did not intend to save costs in R&D, and still hired 120 R&D talents against the trend. He said that the only way to make Hynix a complete transformation is to bring the technology to the highest standards.

As a result of continuous investment in research and development, Hynix has successfully developed high value-added products. For example, DDR3 chips can reduce power consumption by 30% and speed up calculations, thus significantly improving productivity through technological advancement. At this time, competitors have reduced their investment in equipment due to the poor economy.

In addition, there is another thing that is rarely known to the outside world. It is said that there is a walkway called "Supremacy Road" in the Hynix Incheon plant. The walkway is 100 meters long and 4 meters wide. The walls on both sides record the achievements of front-line workers with blood and tears. It is reported that there are at least 7,000 records of employees' achievements, and this record is still increasing.

In 2008, amid concerns about technology outflows from all walks of life in South Korea, Hynix, in order to avoid trade barriers, ignored the opposition and introduced the cutting-edge 54-nanometer process in its Chinese factory.

Kim Jong-ja pointed out that Greater China accounts for 70% of global semiconductor demand, and most of the major customers' factories are located in mainland China, so this is an unavoidable decision. The results also proved that Kim Jong-ja was right, because mainland factories currently account for 50% of Hynix's DRAM production capacity, and Hynix also has a 41% market share in the mainland market.

Market insiders believe that Hynix and Samsung Electronics will continue to enjoy a prosperous global semiconductor market in 2010. Hynix's efforts in research and development will not stop. Kim Jong-gap said that the company will expand its 44-nanometer production line in 2010 to further widen the technological gap with other latecomers.