Hynix, the Korean Giant Chip, Is Ready to Seek a Buyer
By DON KIRK The New York Times
The technology slump has hit South Korea (news - web sites)'s semiconductor giants so hard that one, Hynix Semiconductor, said that it was ready to discuss selling its assets to any interested investor.
SEOUL, South Korea, Oct. 19 The technology slump has hit South Korea's semiconductor giants so hard that one, Hynix Semiconductor, said today that it was ready to discuss selling its assets to any interested investor.
Hynix, the former Hyundai Electronics, reported the worst quarter in its 18-year history today, posting a net loss of $1.25 billion in the period ended Sept. 30. Total debt shot up to $6.6 billion at the end of the quarter, from $5 billion at the end of June; analysts, who had expected a somewhat smaller loss, said Hynix may now owe more than $8 billion.
Hynix, the third-largest semiconductor maker in the world, was founded in 1983 to compete with Samsung Electronics, now the No. 1 chip maker, across a wide range of electronic goods. (Micron is No. 2.)
Hynix said it was still in talks with its creditors, led by the Korea Exchange Bank, over a proposed $4 billion rescue plan including more than $1 billion in new credits. The creditor banks, which have assumed control of the company's finances, said Hynix's problems were eating into their profits, and that they were increasingly reluctant to bail it out.
"If you look at the amount of cash we've pumped in, it's incredible," said Wilfred Horie, president of Korea First Bank. "We don't see the chip business coming back any time soon."
Kim Seung Soo, a Hynix spokesman, confirmed that the company was negotiating with Chinese companies over a possible sale of its manufacturing operations, which might yield $1 billion or so. But Mr. Kim said the company would welcome other offers. "We are open to discussion with anyone who is willing to give us money," he said.
Hynix sold other divisions over the last year to focus almost exclusively on chip making. Samsung Electronics' semiconductor division is also suffering steep losses, analysts said, but Samsung counts on memory chips for less than one-third of its total sales. When Samsung reports third-quarter results on Monday, analysts expect its other operations, less hard hit, to yield a small overall profit.
Even so, James Chung, a spokesman for Samsung, acknowledged today that "some analysts worry whether Samsung Electronics also faces disaster."
Chip prices, already soft before the Sept. 11 terror attacks, have slumped since. Standard 64-megabyte dynamic random access memory chips, which sold for 95 cents apiece in early September, bring just 65 cents to 85 cents today, according to Lee Key Man, research manager of the Semiconductor Association of Korea; larger 128-megabyte chips have fallen to the $1-to-$1.25 range from $1.60, he said. Analysts speculated that Hynix had been cutting prices still further in an attempt to regain market share and buck up the confidence of creditors.
Mr. Kim of Hynix said the company's share of the global chip market, once 17 percent to 18 percent, may have fallen to 15 percent, and it may no longer be No. 3 behind Samsung and Micron Technologies. But he said Hynix was still "in the Big Five," which also includes Infineon and Elpida Memory, formed when NEC and Hitachi of Japan combined their memory chip operations earlier this year.
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