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Micron bids for Hynix factories.

Byline: From Register-Guard and news service reports

Micron Technology Inc. has proposed paying $1.5 billion to $2 billion for Hynix Semiconductor Inc.'s Eugene plant and Hynix's six memory-chip plants in South Korea, news services reported.

Micron, based in Boise, would pay for the facilities largely with its own stock, said the Electronic Buyers News, quoting industry sources.

It was not immediately clear whether the Korean banks that control Hynix liked the proposal. Hynix would use the Micron stock to help pay off the $6.6 billion it owes the banks, the Electronic Buyers News reported.

Under the deal, Micron also would get a 20 percent minority stake in Hynix's nonmemory-chip factories in Korea, perhaps in exchange for a cash infusion, news services reported.

Hynix has six nonmemory-chip factories in Korea, along with six memory-chip factories there, plus the west Eugene plant. Hynix has largely finished a $156 million equipment upgrade of the Eugene plant and has begun recalling workers in order to restart the plant for commercial production, employees say. The plant will make 256-megabit dynamic random access memory - or DRAM - chips, the emerging new standard for chips.

A spokesman at the plant did not return a telephone call from The Register-Guard seeking comment on Monday.

If the deal goes through, Micron would become the world's largest memory-chip maker, topping current industry leader Samsung Electronics.

Analysts say that in a consolidated industry, Micron would be able to better control production levels to match demand and be able to get better prices for chips.

The deal would give Micron the Hynix plants at about a quarter of what it costs to build new plants, news services said.

Just what Hynix's seven memory-chip plants are worth is a matter of debate.

A new report by Korea Investment Trust Management & Securities Co. pegged the value at $4.1 billion, based on Hynix's cash flow, according to The Korea Herald newspaper. That's about 70 percent higher than the figure arrived at by consulting firm Arthur Andersen just three months ago. The rise is due to the recent surge in DRAM prices, the newspaper said.

The report by Korea Investment Trust Management said the seven memory-chip plants have an average value of $590 million.

Hynix (previously named Hyundai) spent about $1.4 billion building and equipping the Eugene plant in the mid-1990s. About $1 billion of that was for chip-making equipment. Such equipment quickly becomes obsolete.

It's not clear what Micron would do with the Eugene plant.

A spokesman for Micron could not be reached Monday.

The union that represents workers at Hynix's Korean factories has said it fears Micron would halt production at some of the Korean plants in order to shrink inventories and drive up chip prices, The Korea Herald reported.

Micron late last year bought a 128-megabit DRAM chip plant from Toshiba in Virginia for an undisclosed price and said it plans to lay off an undetermined number of the plant's 1,700 workers.
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Title Annotation:Business: The company reportedly has offered up to $2 billion for the Eugene plant and six in South Korea.; Business
Publication:The Register-Guard (Eugene, OR)
Geographic Code:1USA
Date:Jan 15, 2002
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