The US government again warned Korea to avoid helping Hynix Semiconductor Inc, which is seeking its second bailout in three months, the Korea Economic Daily reported.
The paper cited Thomas Hubbard, the new US ambassador to Seoul, as telling Korean reporters in Washington that any help provided by the government to the No. 3 computer memory chipmaker would be "inappropriate" because it would hurt US interests.
The US has often accused Korea of unfairly subsidizing Hynix to the detriment of US-based Micron Technology Inc. Hynix lost US$1.6 billion in the first half and is seeking a US$4.1 billion bailout through a share sale and debt-for-equity swap.
Granted, the Korean government has said repeatedly that it won't come to the aid of Hynix. Finance and Economy Minister Jin Nyum said for the first time on Saturday that Hynix may be forced into court receivership if it doesn't get a bailout. The company's creditors are meeting today to decide whether to approve the proposal.
Micron executives continue to insist that the South Korean government is helping Hynix. They say it is probably putting pressure on lenders to approve the plan. The government owns or has a controlling stake in all of Hynix's major creditor banks.
"We are extremely upset that the South Korean government is helping to continue to prop up the failing Hynix," said Sean Mahoney, a spokesman for Eugene Oregon-based Micron. "It's a blatant violation of free trade regulations." Hynix needs more time to pay its debts as interest payments erode operating income already crimped by slumping chip prices, which have been below production costs since May.
Last week, Takahira Ogawa, Standard & Poor's Corp's Asia-Pacific director of sovereign ratings, said in Seoul that the government should not intervene.
"If the government heavily intervenes in creditors' decision for Hynix, it will give a negative image," he said.
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