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Micron team looks at Hynix plant.

Byline: SHERRI BURI McDONALD The Register-Guard

Officials with Micron Technology Inc., a Boise-based computer-chip maker, have visited Eugene to inspect the Hynix plant here, a Micron spokesman confirmed Wednesday.

The visit was part of Micron's "due diligence" examination of all Hynix property and operations, as Micron and Hynix consider a strategic alliance, spokesman Sean Mahoney said.

The companies announced last week that they are exploring an alliance, which analysts speculate might range from a production joint venture at some Hynix factories to Micron's purchase of some Hynix plants. Less likely, analysts say, would be a merger of the two companies, which would create a behemoth larger than industry leader Samsung.

A team of Micron executives visited South Korea last week to inspect Hynix's facilities there.

Mahoney would not elaborate on when Micron representatives were in Eugene, their opinion of the plant, or whether the plant would enhance Micron's holdings.

"Micron is taking a very close look at the opportunities (with Hynix) and some other opportunities that have presented themselves in this market," Mahoney said. "It would be premature to predict what sort of action might take place."

Hynix in July laid off 600 of its 800 workers at the Eugene facility and stopped producing 64-megabit DRAM chips while it upgrades the plant to make more advanced 256-megabit chips. The company on Wednesday said it has gradually hired back 150 workers and now employs about 350 people. It said it still plans to rehire laid-off workers in January.

Since July, Hynix has applied for several dozen permits to install production equipment at the plant, said Keith Haggas, code analyst for the city of Eugene. City building and electrical inspectors have been reviewing the work as it is completed, he said.

It's hard to tell how close Hynix is to completing the upgrade, Haggas said.

The Eugene plant is making the 256-megabit product on a trial basis, said Kitsy Knoche, a Hynix spokeswoman in California. Hynix recently sent samples to a major customer for review, she said.

In a recent address to shareholders, Micron Chief Executive Officer Steve Appleton said Micron had been contacted by almost every maker of dynamic random access memory chips in the industry - except Samsung - about some sort of merger, alliance or asset sale. Micron is the world's number two chip producer, and Hynix is number three.

"If an opportunity presents itself that would be a smart move for Micron, then we'd make that," Mahoney said.

Micron, founded in Boise in 1978, has 18,000 employees worldwide. It owns factories in Boise, Avezzano, Italy, and Nishiwaki City, Japan. Micron also has joint venture interest in operations at Tech Semiconductor in Singapore; a memory module assembly facility in East Kilbride, Scotland; and an assembly and test operation in Singapore.

In 1995, the same year Hynix - then Hyundai - broke ground on the computer-chip factory in west Eugene, Micron started construction on a chip factory in Lehi, Utah. Micron chose a 2,000-acre site between Salt Lake City and Provo. In February 1996, when the chip market suddenly sagged, Micron decided to complete the factory shell but not to fill it with expensive production equipment until demand improved. Micron still hasn't equipped the facility for manufacturing. It houses a product test operation.

Like all DRAM manufacturers, Micron has been hit by the slow market. The company reported a loss of $625 million on sales of $3.9 billion in the fiscal year that ended in August.

Rumors have circulated for years that Hynix wants to sell the Eugene plant. The possibility resurfaced on Tuesday when the Eugene plant appeared on a list of assets its Korean parent, Hynix Semiconductor, is offering for sale, according to a report in the Korean Herald newspaper.

Hynix owns 12 plants in Korea and the Eugene plant.
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Title Annotation:Alliance: The chip maker remains noncommittal about its interest in the Eugene plant.; Business
Publication:The Register-Guard (Eugene, OR)
Geographic Code:1USA
Date:Dec 13, 2001
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