Micron alarmed at Hyundai purchase of LG Semicon
By Anthony Cataldo
EE Times
(01/13/99, 11:02 a.m. EDT)
TOKYO — Micron Technology Inc. is raising warning flags over Hyundai Electronics Industries Co.'s proposed purchase of domestic South Korean rival, LG Semicon Co., saying it will pressure Washington to oppose the merger if the South Korean government tries to forgive the new company's massive debt.
"The things that concern us is whether the Korean government will forgive that debt," said a spokeswoman at the headquarters of Micron (Boise, Idaho). "That would be very damaging to the [DRAM] industry. We would be in total opposition to that."
Hyundai and LG Semicon together owe about $9 billion, which would give the merged company a debt-to-equity ratio of more than 600 percent, according to analysts.
"The other concern is what Hyundai will do with the older fabs," the Micron spokeswoman said. "Our hope is that they would take some of the facilities off line."
Micron was one of the more vocal companies lobbying Congress last year during the debate over the U.S. government's contribution to the International Monetary Fund, and was the lightning rod behind a provision that barred U.S. money from being used to bail out Korean semiconductor companies, the spokeswoman said.
But Micron's concerns may be baseless, said Ilsuk Han, an analyst with ING Barings (Seoul, South Korea). "Other than Micron, nobody's talked about [forgiveness of debt]," he said. "The debt is unlikely to just disappear. The banks have their own shareholders to think about."
Han added that a more likely scenario would be a debt-to-equity swap with the banks, or deferred loan payments. In any case, all discussion of debt payments is premature, he said, since the two companies have yet to settle on a buyout price.
Micron has a long history of asking the U.S. government to take action against Asian chip rivals that Micron believes are dumping products in the U.S. market. Last year the company made an unsuccessful bid to persuade the U.S. International Trade Commission (ITC) to levy dumping duties on SRAMs made by LG Semicon, Hyundai and Samsung. The company scored a victory by winning an ITC ruling against Taiwanese chip makers and U.S. fabless companies that manufacture in Taiwan.
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