May 8, 2008 – Hynix Semiconductor and ProMOS Technologies have agreed to a partnership that will allow access to the Korean chipmaker’s 50nm-node DRAM stack process technology, and give Hynix access to more 300mm capacity and an 8%-10% ownership stake in the Taiwan memory firm.

Analysts are calling the deal a “win-win” for both sides, noting that ProMOS needs money while Hynix can’t afford to lose its partner to a memory competitor. “Without ProMOS, Hynix would have faced a decline in market share and revenue.” said Jay Kim, an analyst at Hyundai Securities, quoted by Dow Jones. Their story noted that Promos initially had been planning to raise up to $350M by selling bonds and sell up to 1B new preferred shares in a private placement, plus 1.5B new common shares

“Hynix has always been recognized as one of the foremost technology leaders in global DRAM industry,” said Min-Liang Chen, chairman/president of ProMOS Technologies, in a statement. Now, the relationship will deepen from “being a mere technology partner” (ProMOS was already making 80nm DRAM chips for Hynix) to a major shareholder, a “synergistic relationship [that] will be of great benefits to both companies and their respective customers.”

The deal currently is being called an “amendment,” though Hynix said in a statement that it will “commence the government filing process immediately.”

The Korea Times noted that Hynix would need to come up with ~$180M for the proposed stake, which is at the upper limit of what is allowed by the Taiwan government for foreign ownership in domestic chip companies. The paper said Hynix expects to reap ~$500M in combined royalties and contract fees over the next three years, while saving some 3T won (US ~$2.92B) in spending.

Local media had speculated that Elpida, not Hynix, was on the doorstep of a deal with ProMOS; the Korean paper pointed out that Samsung had been complaining about Hynix’s sending leading-edge technology overseas.

ProMOS chairman Chen Min-Liang, cited by Dow Jones speaking at an investor meeting in Taiwan, confirmed that talks with Elpida had broken down, primarily because it was cheaper to migrate to the smaller node with existing partner Hynix. He noted that ProMOS will be able to start making the 54nm chips for Hynix later this year or early next.