Globalfoundries gets access to South Korea

Deals between Abu Dhabi's Globalfoundries and South Korean microchip companies receives a major boost after ATIC signed a co-operation accord with a South Korean industry body.

The prospects for deals between Abu Dhabi's Globalfoundries and South Korean microchip companies received a major boost yesterday after its parent Advanced Technology Investment Company (ATIC) signed a co-operation accord with a South Korean industry body. The accord follows reports last week that the UAE was interested in buying a stake in South Korea's Hynix Semiconductor, the world's second-largest maker of computer memory chips by revenue.

The South Korean vice minister for knowledge economy Kim Young-Hak said yesterday the country had approached the UAE about investing in Hynix. A number of South Korean banks control a 28 per cent stake in Hynix through debt-for-equity swaps after the company nearly collapsed under the weight of its debt after chip prices plunged in 2001. The banks now want to shed that holding. The ATIC chief executive Ibrahim Ajami dashed the speculation.

"ATIC at this stage is not exploring the possibility of investing in Hynix. There's a lot of other investment companies in Abu Dhabi as you know, but ATIC is not involved," Mr Ajami said. ATIC, the investment firm fully owned by the Abu Dhabi Government, is the majority owner of Globalfoundries, the customised chip maker that formed a venture with Advanced Micro Devices of the US last year. ATIC's pact with the Korean Semiconductor Industry Association (KSIA), which represents 240 companies, highlights the growing business relationship between the UAE and South Korea in the energy, technology and transport sectors.

This week the countries are expected to formally sign a deal to jointly market military vessels and develop ship designs. Last month, the UAE signed a US$20 billion (Dh73.45bn) deal with a South Korean group to build the country's first nuclear power stations. Next to the US and Japan, the South Korean semiconductor market is one of the largest in the world with Samsung Electronics and Hynix combining for more than $23bn in annual sales.

Globalfoundries will begin immediately to seek new business in South Korea. "We're very excited. We want to start working out a way to put a team on the ground as fast as possible," Mr Ajami said. "We need to make sure we assess competitive and co-operative dynamics and not to forget that Globalfoundries continues to be the big driving engine here." ATIC has been active in promoting its chip business since Globalfoundries closed its acquisition of Singapore's Chartered Semiconductor last week. Globalfoundries recently signed a deal with the mobile chip maker Qualcomm, its biggest customer to date.

Mr Ajami said more deals would probably be announced this year, but he did not identify any potential customers. * with Bloomberg