Hynix considers selling factory

October 9, 2001 – Seoul, Korea – Hynix Semiconductor Inc., said it is considering selling one of its semiconductor facilities as part of its restructuring efforts, but denied reports that it is in advanced talks with a Chinese consortium, according to the Korea Herald.

Local newspapers reported that Hynix is attempting to sell parts of its semiconductor fabs to a Chinese consortium, the first move ever to shed its core memory business units.

The semiconductor maker has been spinning off and shedding non-core business units in order to improve its profitability and secure cash to stay afloat, amid a deepening slump in the PC memory chip sector.

Hynix stressed that its talks with Chinese companies are just one of the many possibilities.

“Although Hynix is weighing the possibility of selling one of its fabs to a variety of entities, both public and private, it has not yet made any decision on such a sale,” Hynix said in a statement. Hynix said it is now aggressively pursuing possible strategic alliances with some of the world’s other leading semiconductor manufacturers for such deals.

Local press, meantime, quoted government officials as saying that Hynix embraced the sell off of part of its fabs to China, as it tried to meet the request from creditors in connection with fresh loan deals.

A group of Hynix officials are now in China, advancing the talks with potential Chinese companies, and the Chinese negotiators will visit Korea within the month for fact-finding missions, local reports said. The Chinese buyer would be a consortium of city administrations, universities and electronics firms, underscoring China’s ambition to enter the global semiconductor market.

China has been expanding investment in semiconductor sector since 1998. It plans to set up 30 fabs in the Shanghai region alone by 2010.

Local reports said the Chinese buyer, however, is demanding a transfer of cutting-edge memory chip manufacturing technologies, raising the fear of giving away core technology in a hurry to rescue trouble-ridden Hynix.

Hynix is currently operating a total of 13 memory chip production facilities, seven of which are based on 200mm wafers. Hynix said it expects to gain about 745 billion won by the end of November by selling some assets, including a 12% stake in the U.S.-based Maxtor Corp. for about $113 million.

In September, the company agreed to its TFT-LCD unit to a consortium led by Taiwan’s Cando Corp. for about $650 million.


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