Europe's STMicroelectronics has offered to discuss a strategic deal involving memory chip operations with South Korean microchip giant Hynix Semiconductor, officials said yesterday.
"We have received an offer from ST Microelectronics to discuss how to strategically deal with memory chip operations," Hynix spokesman Park Min-Ho said.
Hynix, however, refused to confirm reports that the European company has offered to transfer NOR flash memory lines to Hynix and buy a 5-10 percent stake in the South Korean chipmaker.
At current market prices, a 10 percent stake would be worth about 1 trillion won (US$970 million). Hynix shares soared 8.35 percent yesterday to close at 22,050 won.
In Paris, a US investment bank trader said this would be a "transformational deal" for STMicro, as its loss-making flash memory chip business represents about 35 percent of capital employed but only 12 percent of revenues.
"This is in line with our view that STMicro will spin its flash memory business and concentrate on historic strengths of mixed signal/analogue," the trader said.
The offer came two days after Hynix regained control of its management from creditors, ending a four-year debt workout program.
Hynix creditors said they were preparing for the sale of a 24 percent stake, sparking speculation that the world's second largest maker of dynamic random access memory (DRAM) chips may become a takeover target.
Analysts said Hynix could benefit from any deal with STMicroelectronics as the South Korean company faces anti-dumping charges in Europe.
"If the big deal materializes, Hynix can expect a number of positives, including a complete semiconductor chip line-up, credit rating upgrades and easing trade frictions with Europe," Daewoo Securities analyst Chung Chang-won said.
Hynix has stepped up production of bigger wafers which allow manufacturers to churn out more chips, thus reducing costs.
In April, Hynix and STMicroelectronics agreed to build a US$2 billion plant in China to make 200mm wafers this year and 300mm wafers by the end of next year.
Hynix has raised fresh funds at home and abroad to repay debt and stand on its own feet since it was put under the debt workout program in 2001.
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