South Korea-based Hynix Semicon-ductor Inc secured a lifeline for its sinking business yesterday with a US$380 million deal to sell its key liquid crystal display (LCD) unit to a Chinese firm.
The world's third largest memory chipmaker said that it has signed a memorandum of understanding with China's BOE Technology Group to sell its TFT-LCD unit.
Hynix shares rose 14 percent, or 60 won (US$0.05) to 475 won in early trade, with investors reacting positively to the deal which Hynix said helped the ailing company speed up its restructuring.
"The sale will help Hynix strengthen investments in semiconductor operations and focus on core businesses," Hynix said in a statement.
It would be the largest sale of the company's non-core businesses, which have been up for sale to ease its cash-flow crisis.
Hynix plans to sign a final contract with BOE by Oct. 25.
A familiar name
In November last year, a consortium led by BOE took over Hynix's TN/STN LCD unit for 75 billion won. The unit produces small display screens for mobile phones and small mobile computers.
The government has pushed for the sale of Hynix to avoid its collapse under heavy debts. But creditors have yet to find a new buyer for Hynix after the failure of a deal with US giant Micron Technology Inc earlier this year.
Hynix said that with money from the Chinese firm, the TFT-LCD unit could establish new production lines and adopt "more aggressive marketing strategies."
The second deal with BOE followed a heated debate on how to keep Hynix afloat.
Analysts and government officials have called for the sale of Hynix's key chip operations, while union and civic groups have demanded banks inject fresh loans into the company for its long-term survival.
Earlier reports said that financial advisor Deutsche Bank had recommended that creditors offer another debt and corporate restructuring package before selling the struggling chipmaker.
Financial officials, however, remained negative over the reported package insisting Hynix could not make sufficient investments to stay competitive in the industry due to low chip prices.
Hynix fell back into the red in the second quarter this year after another slump in chip prices made lenders scarce, aggravating its credit crunch.
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