South Korea's troubled Hynix Semiconductor Inc is likely to sign a deal with Micron Technology Inc in January, featuring equity swaps and asset sales, Hynix and government officials said yesterday.
The prospect of two of the world's leading semiconductor makers joining hands sent Hynix shares 14.85 percent higher to their daily limit of 2,345 won before they were suspended from further trade for the day.
"A delegation from Micron Technology will visit Seoul in January and sign a memorandum of understanding (MoU) with Hynix," said Lee Keun-Young, head of the Financial Supervisory Commission. "The MoU will contain key points of the strategic alliance," he said.
Upon arrival from negotiations with Micron in the US, Hynix president and chief executive officer Park Chong-Sup on Tuesday said an MoU would be signed as soon as in early January.
"The two sides agreed a very creative deal of strategic alliance which includes asset sales and equity swaps," he said.
He strongly hinted Hynix will sell its semiconductor unit in the US state of Oregon to Micron and that the two companies will jointly manage other Hynix facilities through equity swaps.
Hynix suspended the plant in Oregon for six months until mid-January to shift into the production of 256 DRAM chips instead of the current 64 megabit DRAM.
The plant used to produce 16 percent of Hynix's total DRAM wafer output and more than half of the company's 64Mbit DRAM chips.
Further talks are required to fix the price of Hynix facilities to be sold to Micron and decide on the ratio at which Hynix shares should be swapped for those of Micron, he said.
Hynix, the world's third largest memory chip maker following Samsung Electronics and Micron, launched a second round of talks on analliance with Micron this month.
The alliance is believed to focus on a possible swap of equity shares of the two companies, Micron's investment in Hynix or purchase of its facilities.
News reports here said Micron wants management control of Hynix through an equity swap, a scenario which is considered unacceptable here.
Hynix has been kept afloat by two multi-billion dollar bailout packages. Even with the latest rescue package in October, Hynix will still have to tackle some six trillion won (US$4.6 billion) of outstanding debts.
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