Hynix: $84.6 million profit in 2002.

Byline: From Register-Guard and news service reports

Hynix Semiconductor Inc. racked up a whopping $3.8 billion loss last year, but has posted an operating profit for the first two months of this year, the company announced Wednesday.

Hynix, which owns the west Eugene Hynix computer chip factory plus a dozen chip factories in South Korea, said it posted an operating profit of $84.6 million in January and February. The company didn't give a reason for the black ink, but observers figure it's because increased demand has boosted chip prices.

Hynix is negotiating with Boise-based Micron Technology Inc. over Micron's proposal to buy Hynix's memory-chip operations, including the Eugene plant. However, as Hynix's fortunes improve, Hynix may become less anxious to sell.

``The figures clearly provide evidence that the company can stand on its own,'' said Simon Woo, an analyst at Hyundai Securities Co.

Woo added, however, that Hynix's future depends on whether global chip demand and prices stay at least at the current level, giving Hynix the cash flow to handle debt payments and continue to invest in plant upgrades.

Hynix's $3.8 billion loss for all of last year was bigger than analysts expected. Much of the loss was due to writing off losses in the sale of subsidiaries and obsolete equipment.

Hynix chip sales last year fell to $3 billion, down from $6.8 billion in 2000, the company said.

Company officials said they expect a first-quarter profit as chip prices rebound. Yet, the unexpectedly large loss last year may prompt creditors, who provided two multibillion-dollar rescue packages last year, to accept Micron's latest offer, reported to be about $4 billion. Micron has proposed buying the Eugene memory-chip plant plus Hynix's six memory-chip plants in Korea.

``Hynix needs new money to invest in its technology if it is to survive on its own,'' said Lee Jae Hyun, a manager at KEB Commerz Investment Trust Management in Seoul. ``I don't think creditors are willing to do that.''

Chipmakers worldwide lost money last year when personal computer makers slashed orders for components as they suffered the first sales decline in their history. The market for memory chips shrank by two-thirds, to $11 billion.

Rising chip prices are definitely helping Hynix now, however.

The spot price of the industry-standard 128-megabit dynamic random access memory chip rose to $4.42 as of Tuesday, from $2.56 at the beginning of the year. Analysts estimate Hynix and its rivals earn a profit on the chips if they can sell them for more than $3.50 apiece.

Hynix Chief Operating Officer Sang Park said rising chip prices mean the company won't need help from creditors to maintain operations. If the company achieves sales this year of $3.8 billion and 128-megabit DRAM prices stay above $3.20, "we won't have any cash-flow problems,'' he said.

However, some analysts think chip prices may fall in the second quarter, a period that is typically slack for personal computers. ``The bottom is not going to fall out on memory chip prices, but there is no incremental demand for PCs,'' said Keon Han, an analyst at Bear Stearns Asia Ltd.

Hynix CEO Park Chong Sup and other officials declined to comment on the negotiations with Micron. Park left for the United States on Wednesday for further talks with Micron.

Some analysts said the company's contention that it will return to profitability suggests the bargaining is far from over.

By announcing a positive outlook, ``the company is trying to persuade creditors that it is capable of independent survival or is seeking a higher sale price from Micron,'' said Jeon Woo Jong, an analyst at SK Securities Co.

In its Wednesday announcement of its annual results, the company didn't break out results for the latest quarter, which ended Dec. 31.

The last time Hynix turned a profit was in the third quarter of 2000.

Of its $3.8 billion loss in 2001, the company classified $1 billion as operating losses, and the remainder as ``non- recurring expenses.'' These included write-offs for "development costs" that it said would not recur. They also included writing off of losses in selling subsidiaries and obsolete assets, writing off inventory, and reducing the value of securities the company owns.