Price gap stalls Hynix-Micron talks.

Byline: SHERRI BURI McDONALD The Register-Guard

Hynix Semiconductor Inc. may not sell its memory-chip plants, including the west Eugene factory, any time soon.

The latest round of talks between Hynix and Micron Technology Inc. broke off last week and no new discussions are planned, representatives from Micron and Hynix said Monday.

Money appeared to be the stumbling block. Hynix has asked for $5 billion for the Eugene plant and six memory-chip plants in Korea, according to news reports. Micron was offering only about $3.2 billion, according to the reports.

Micron, the world's second largest memory-chip maker, has been negotiating for at least two months with Korea-based Hynix, which is No. 3, for some type of alliance or purchase that could have created the world's biggest memory-chip company.

The most recent negotiations had been expected to end with a memorandum of understanding. The talks took place last week at an undisclosed location in California and ended Thursday, Micron spokesman Sean Mahoney said.

``No agreement has been reached, and no further talks are planned at this time,'' Mahoney said.

Mahoney declined to say whether Micron was negotiating with companies besides Hynix or to comment on why the talks ended. Micron has divulged little about the talks, confirming only that they were taking place.

Hynix spokeswoman Kitsy Knoche said the companies were unable to reach agreement and no further talks have been scheduled.

"We do not feel that the talks had broken down, only that an agreement was not reached," she said.

Industry analysts speculated that price was the sticking point.

"I think basically the issue is the valuation of the company is a couple of billion of dollars different depending on which side of the fence you're on," said Richard Gordon, semiconductor analyst for Gartner Dataquest, a Massachusetts-based industry research firm.

Several analysts characterized the break in talks as a bump in the road, but not necessarily the end of the road.

"It's an impasse, but I don't think it ends the conversation," said Victor de Dios, computer memory analyst, de Dios & Associates in Newark, Calif. "From here on out, it depends on who is more willing to make the deal go through."

It isn't clear which party is more interested in moving the deal forward, he added.

Analysts have said that as memory-chip prices have increased late last year and earlier this year, Hynix has increased the price it wants for its memory-chip operations.

Hynix's creditor banks, which are owed about $6.6 billion, are essentially in control of Hynix, and it is they who set the $5 billion price-tag, analysts say.

Both de Dios and Gordon said they were surprised that Hynix's creditors weren't more willing to negotiate.

"It appears that the resistance is in the Hynix side," de Dios speculated.

But then, "bankers are bankers," he added. The more banks can get on the sale of Hynix's memory-chip plants, the less Hynix debt the banks will have to write off.

"I think Micron has all the aces here really, so they're probably in a better negotiating position," Gordon said.

Soo Kyoum Kim, a memory analyst in Seoul with IDC, a research firm in Framingham, Mass., said he thinks Hynix's creditors will try to reach a compromise with Micron and will drop their asking price.

"Maybe they need more time to cool down ... to organize their ideas," Kim said.

The meeting was the third round of negotiations since the two parties agreed in December to seek a strategic alliance and consider other options that industry officials said could lead to a merger.

Hynix's troubles worsened this year amid sagging global demand and falling prices for memory chips.

Bloomberg News contributed to this report.