Hynix to close Micron talks this month


Investors have cheered news of consolidation in the chip industry, where analysts see too much capacity

By staff and wire reports

SEOUL, South Korea -- South Korea's Hynix Semiconductor said on Wednesday it will wrap up tieup talks with Micron Technology in January.

The news sent chip stocks racing in South Korea, where Hynix was the most-traded stock in the morning. It went into the noon break up 5.8 percent at 2,555 won.

Investors had worried that Micron Technology would back off on discussions with the beleaguered chipmaker after settling terms to buy a U.S. chip plant from Toshiba.

But Hynix has repeatedly stated that talks are continuing. They are now set to conclude soon, the company says.

Investors are looking for a linkup with Micron and a reduction in the amount of chip capacity worldwide.

"We have been engaged in talks (with Micron) for segregation and strategic investment in the memory and non-memory chip businesses," Hynix President Park Chong-sup said in an e-mail to employees, which the company released to the media. "We'll decide whether to sign an agreement in January."

Kospi off to a strong start

The news meant Korean stocks got 2002 off to a good start after the New Year's holiday. The Kospi was up 3 percent at 714.48. It was one of Asia's top performers last year.

Larger rival Samsung Electronics Co. jumped 5.6 percent to 294,500 won.

Analysts say there is too much production capacity in the dynamic random access memory (DRAM) chips that industry No. 1 Samsung and No. 3 Hynix both make.

A complex consolidation dance is under way involving the Korean makers, No. 2 Micron, based in the United States, and No. 4 Infineon, based in Germany. Smaller Japanese competitors like Toshiba have also gotten involved.

Cash-strapped Hynix may sell operations making the most common types of DRAM chips to Micron, a company official said last Friday.

A Micron-Hynix alliance could recast the industry, with their combined output capacity exceeding Samsung.

The Chosun Ilbo newspaper on Friday, citing a Hynix source, said if Hynix sold DRAM facilities, in return it would expect a stake in Micron, as well as cash or an equity investment from the U.S. company.

Hynix has been saved from collapse by creditors twice this year and is seeking to sell chip plants and other assets to raise more funds.

Reuters contributed to this report.