South Korea's Finance and Economy Minister Jeon Yun-churl said yesterday that new talks should be held to sell debt-stricken Hynix Semiconductor Inc to Micron Technology Inc of the US.
But the world's third largest memory chipmaker remained adamant that it wanted to stand on its own feet.
A day after the Hynix board vetoed an accord to sell the firm's core operations to Micron, Jeon urged South Korean creditor banks to accept any Micron offer for new negotiations.
"There is no need to refuse" any Micron offer to reopen talks, Jeon told reporters.
The decision of the Hynix board left the fate of the company in doubt again as it struggles with liabilities estimated at 9 trillion won (US$6.7 billion).
Government officials have previously warned the ailing chip company would collapse without an early injection of foreign capital.
Jeon called for creditors to resolve Hynix's problems as quickly as possible and said new loans to Hynix and debt write-offs would be "undesirable" if the ailing company insists on remaining independent.
Jeon said creditors should decide whether to place Hynix under court receivership.
Yonhap news agency quoted a senior Hynix official as saying the firm would sell its smaller non-memory chip business by the end of next year to help its bigger memory unit survive.
"One or two companies have already expressed interest in purchasing the non-memory chip business business," the Hynix official said.
The Hynix board rejected a non-binding accord negotiated between key creditors and Micron, expressing doubt over the viability of the remaining Hynix businesses if Micron took over the company's core memory chip assets.
The decision followed protests by Hynix workers who threatened a strike if the accord went ahead. Unions insisted the company could survive without Micron Technology.
Hynix earlier this month posted a net profit of 35 billion won in the first three months to March, its first profit for two years.
More than 80 percent of Hynix unionized workers had tendered their resignation in protest at the proposed deal with Micron.
But some analysts have been skeptical about the independent survival of Hynix because of volatile semiconductor prices and the firm's huge debt.
Under the accord, Micron had agreed to buy Hynix memory chip operations in exchange for 108.6 million Micron shares, worth around US$3 billion at the company's current share price.
Micron had also agreed to pay US$200 million for a 15 percent stake in Hynix's non-memory business, in return for US$1.5 billion of fresh loans from creditors.
The government had pushed hard for the sale of Hynix as a key part of its corporate restructuring drive, which began in late 1997 when the country was hit by the Asian financial crisis.
The business fiasco was turning into a political issue Wednesday when the opposition Grand National Party denounced what it calls "the sales deal pushed unilaterally by the government."