BOE Technology Group Co said it will buy debt-laden Hynix Semiconductor Inc's assets with help from a South Korean partner, allowing the third-largest chipmaker to reduce its borrowings and gain a foothold in China.
The Chinese maker of computer monitors will set up a venture with Hynix and Semicon Engineering Co in South Korea to invest an undisclosed amount, BOE Technology said in a statement.
The venture will spend US$60 million to buy and operate Hynix's former manufacturing lines for small-sized flat displays used in mobile phones and other portable devices, as well as its distribution network. The company will move part of the production lines back to China in one or two years.
Hynix must pay at least three-quarters of its 8.64 trillion won (US$6.7 billion) debt that comes due this year and dispose of its unprofitable flat-panel assets after prices dropped 40 percent. China, which lacks a flat-panel maker to supply a personal computer market forecast to grow by a third this year, may favor the venture's products.
"Hynix wants to dump its flat displays units, and we find it a bargain to buy the production lines at this moment," said Li Peng, an assistant to BOE Technology's board secretary. "We don't expect the market for small-sized flat displays to be saturated in the near future, at least in China."
Hynix expected to reach US$160 million in sales for small-sized displays, with a profit of US$4.07 million this year, according to BOE Technology.
BOE Technology, formally know as Beijing Orient Electronics, will own a majority stake in the venture with 45 percent, with Semicon Engineering holding 35 percent and Hynix 15 percent. The employees will hold the rest.
The maker of monitors, laptops and digital cameras said it scrapped an earlier US$350 million plan to tie up with Taiwan-based Cando Corp to buy Hynix's big-sized flat display unit because of a glut in the market for large screens.
The pact, which has yet to be approved by BOE Technology's board and the Chinese government, is expected to be signed next month, BOE Technology said.
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