Hynix considers selling factory to China
Hynix Semiconductor Inc., the world's third largest computer memory chipmaker, said it is considering selling one of its semiconductor facilities as part of its restructuring efforts, but denied local reports that it is in advanced talks with a Chinese consortium.
Local newspapers reported Saturday that Hynix is attempting to sell parts of its semiconductor fabs, or chip manufacturing facilities, to a Chinese consortium, the first move ever to shed its core memory business units.
The cash-strapped semiconductor maker has been spinning off and shedding non-core business units in order to improve its profitability and secure cash to stay afloat, amid a deepening slump in the PC memory chip sector.
Hynix, saddled with a total debt of about 8.64 trillion, faces a slowing demand for chips worldwide amid an economic downturn aggravated by uncertainty in the aftermath of the Sept. 11 terrorist attacks on the U.S.
Hynix stressed that its talks with Chinese companies is just one of the many possibilities.
"Although Hynix is weighing the possibility of selling one of its fabs to a variety of entities, both public and private, it has not yet made any decision on such a sale," Hynix said in a statement.
Hynix said it is now aggressively pursuing possible strategic alliances with some of the world's other leading semiconductor manufacturers for such deals.
Local press, meantime, quoted government officials as saying that Hynix embraced the sell off of part of its fabs to China, as it tried to meet the request from creditors in connection with fresh loan deals.
A group of Hynix officials are now in China, advancing the talks with potential Chinese companies, and the Chinese negotiators will visit Korea within this month for fact-finding missions, local reports said.
The Chinese buyer would be a consortium of city administrations, universities and electronics firms, underscoring China's ambition to enter the global semiconductor market.
China has been expanding investment in semiconductor sector since 1998. It plans to set up 30 fabs in the Shanghai region alone by 2010.
Local reports said the Chinese buyer, however, is demanding a transfer of cutting-edge memory chip manufacturing technologies, raising the fear of giving away core technology in a hurry to rescue trouble-ridden Hynix.
The Chosun Ilbo, a vernacular daily, said in its Sunday edition that Hynix is considering selling off 8-inch (200mm) wafer fabs in its deal with a Chinese consortium. The 8-inch wafer production line is a cutting-edge mainstream facility operated by select memory chipmakers in the U.S., Japan, Germany and Korea. China is in its initial investment stage for the 3-inch wafer productions.
The newspaper said Hynix has been pushing for the sell off of its fabs to China since August and the potential Chinese buyer showed keen interest for the 8-inch wafer facilities, citing government sources.
Hynix is currently operating a total of 13 memory chip production facilities, seven of which are based on 8-inch wafers. The company produces chief export items such as 64Mb, 128Mb and 256Mb DRAMs, and DDR (double data rate) RAMs at the 8-inch wafer fabs.
Hynix's negotiations with Chinese buyers came at a time when its fate remains murky amid growing concern over its poor profitability and worsening chip sector outlook.
Hynix said Friday it expects to gain about 745 billion won by the end of November by selling some assets, including a 12 percent stake in the U.S.-based Maxtor Corp. for about $113 million.
Despite such restructuring campaign, creditors failed to iron out their differing positions over whether they should extend fresh loans to Hynix in a meeting Saturday.
In a move to bail out the trouble-laden chipmaker, creditors led by the government-controlled Korea Exchange Bank voted Thursday to freeze Hynix's debt valued at 8.64 trillion won for three months in exchange for restructuring efforts.
Creditors are now weighing a rescue package for extending new loans of about 1 trillion and organizing 3 trillion of its debt-to-equity swap.
As part self-rehabilitation efforts, Hynix also is selling its TN- and STN-LCD production units to Semicon Engineering Co. and an unnamed Chinese firm for about 75 billion this month.
In September, the company agreed to its TFT-LCD unit to a consortium led by Taiwan's Cando Corp. for about $650 million.
The cash troubles for Hynix came after it issued $1.25 billion global depositary receipts in June and received a 5.1 trillion won bailout package organized by its financial advisor Salomon Smith Barney in May.
Despite a slew of production cuts and reduced spending on new capacity this year, the beleaguered memory chip sector continues to struggle under a mass of inventory and excess supply, hurting chipmakers including Hynix.
The high-tech and chip companies had banked on the release of Microsoft Corp's Windows XP operating system in late October and Intel Corp.'s new 845 chipset to give the PC sector a much-needed shot in the arm.
But that hope has been all but dashed, with the launch of XP likely to be overshadowed by economic and political uncertainties in the U.S.
(insight@koreaherald.co.kr)
By Yang Sung-jin Staff reporter
2001.10.08 |
