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Hynix tells workers to take holidays as it slows semiconductor production

Hynix Semiconductor Inc told about 7 percent of its staff to take leave this week so vacations won't disrupt production later, temporarily closing three of its 12 South Korean production lines, the company said.

The Asian Wall Street Journal reported yesterday that the third-largest computer memory chipmaker, which is struggling to repay debt as it sell chips for less than they cost to make, closed three of its five production lines in Ichon to reduce supply.

"We have done this in late July or early August for the past number of years," said Kim Seung Soo, spokesman for Hynix. "Our total output will fall by just 0.5 percent. It's hardly going to have an important impact on supply."

He said all the workers were scheduled to return to work on yesterday. Hynix's domestically traded stock has lost two-thirds of its value since June 15, when the company convinced overseas investors to buy US$1.25 billion of its shares. The former Hyundai Electronics Industries Co needed the money to help reschedule more than US$4 billion of debt coming due that it couldn't repay.

The chipmaker, with total debt more than seven times its market value, plans to ask lenders for more financial assistance as the company runs short of cash, a creditor said last week.

Korea First Bank, which is owed 270 billion won (US$208 million) by Hynix, said Hynix has enough money to repay debt due this year. Still, Lee Soo Ho, Korea First Bank's chief credit officer, warned Hynix might not have enough to invest in its future.

Salomon Smith Barney Inc, which helped arrange Hynix's recent financing, delayed a meeting with main creditor Korea Exchange Bank, originally intended for yesterday. The meeting was postponed at Salomon's request, said Kim Chun Yeul, an official in the corporate loan division at Korea Exchange Bank, without specifying when the meeting will now take place.

Hynix has 13 production lines globally, including its US plant in Eugene, Oregon. It closed the facility earlier this month for about 6 months, to upgrade equipment.
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