Hynix turns to Infineon
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Hynixs attempts to avert bankruptcy took an unexpected turn when the heavily indebted chip giant announced it was in talks with German rival Infineon Technologies.
31 January 2002 The unfolding saga surrounding Hynix's attempts to avert bankruptcy took an unexpected turn when the South Korean chip giant announced it was in merger talks with German rival Infineon Technologies.
Hynix, which has run up debts of around $6 billion (€7.0 billion) despite successive bail-outs from creditors, said the talks with Infineon were still at an early stage. The company added that it had not undecided whether to seek a strategic alliance or a full merger.
The news comes just days after negotiations with US memory chip maker Micron Technology stalled. Micron's offer of $3.1 billion (€3.6bn) for Hynix's core memory business was rejected by the company's creditors, who insist they are not prepared to accept less than $4 billion (€4.6bn).
Rumours that Micron was interested in Hynix's production lines surfaced in December 2001 and caused much controversy among Hynix's South Korean bankers, who feared that the Micron deal would force them to take a loss on their loans.
Because of its dire financial condition, however, Hynix says it will continue to focus on talks with Micron. Recent hikes in chip prices have removed the threat of imminent collapse and reduced the pressure on Hynix's creditors to accept the offer.
Chip analysts have long been calling for consolidation in the memory chip sector, which has been grappling with overcapacity and falling prices; and say fewer manufacturers will allow chip prices to stabilise.
