Hynix Semiconductor Inc lost 5 trillion won (US$3.8 billion) last year, a bigger-than-expected shortfall that may step up pressure on creditors to sell the world's third-biggest chipmaker to rival Micron Technology Inc.
The loss was 900 million won more than the 4.1 trillion won forecast by 19 analysts polled by IBES International Inc. Sales fell by half, to 4 trillion won from 8.9 trillion won, the company said in a statement.
Company officials said they expect a first-quarter net profit as chip prices rebound. Yet the unexpectedly large loss may prompt creditors, who provided two multibillion-dollar rescue packages last year, to accept Micron's latest offer, reported to be about US$4 billion.
"Hynix needs new money to invest in its technology if it is to survive on its own," said Lee Jae-hyun, who manages 100 billion won (US$76 million) at KEB Commerz Investment Trust Management. "I don't think creditors are willing to do that."
Chipmakers, including Micron, lost money last year when personal computer makers slashed orders for components as they suffered the first sales decline in history. The market for memory chips shrank by two-thirds to US$11 billion.
Hynix Chief Executive Officer Park Chong-sup said last month that the company would need 1 trillion won and more debt restructuring to survive if creditors rejected Micron's offer.
Creditors insisted the loss won't hamper efforts to secure an agreement with Micron. "It doesn't affect the negotiations," said Chung Hyung-ryang, head of corporate credit risk at Korea Exchange Bank.
Hynix, which last earned a profit in the third quarter of 2000, a year in which it lost 2.4 trillion won, said it earned 110 billion won in operating profit during the first two months of 2002. It didn't provide a net profit figure, however, or explain why operating profit rose.
Chief Operating Officer Sang Park said rising chip prices mean it will earn a profit this year. "If we achieve sales of 5 trillion won and chip prices stay above US$3.20, we won't have any cash-flow problems," he said.
Falling costs could also help: interest-bearing debt halved to 6.25 trillion won from 11.5 trillion won at the end of 2000, leaving Hynix with a debt-to-equity ratio of 126 percent.
Hynix earmarked 1.3 trillion won of capital spending for 2002, compared with 300 billion won in 2001, and 3 trillion won for 2003, Park said.