30 April 2002 Struggling South Korean memory chip maker Hynix Semiconductor has rejected a rescue bid from US rival Micron Technology. The proposed deal had been valued at up to $3.4 billion (€3.78bn).
The board of Hynix unanimously rebuffed the offer, preferring instead a “stand-alone” solution to its financial crisis. Approval had been considered a foregone conclusion and Hynix could face bankruptcy as a result of its sudden volte-face.
Micron had been in talks with Hynix since December 2001 and a non-binding memorandum of understanding had already been signed by the two companies.
Hynix’s board partly based its decision on the recent recovery in memory-chip prices. From a low of just $1 (€1.1) for a 128 megabit memory chip – eight of which make up one 128 megabyte module – at the end of 2001, the price has more than tripled to about $3.30 (€3.66).
This was partly driven by production cuts by Hynix itself and although the price spike has alleviated memory-chip makers’ problems, the business is still not profitable, say analysts.
Furthermore, few analysts believe that Hynix is strong enough to be able to go it alone. The South Korean authorities and the syndicate of creditor banks that have kept the debt-laden semiconductor group afloat favoured the tie-up with Micron.