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April 2, 2007 11:36 pm

Hynix chief warns on sale of stake

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The chief executive of Hynix Semiconductor on Monday said a new law to ban key technology from leaving the country would make it hard for foreign companies to take control of the South Korean chipmaker when creditors start selling their stake next year.

The comments came as Kim Jong-kap, who took over as chief executive last week, outlined his strategy for the world’s second-largest memory chip supplier amid growing uncertainties over the future ownership of the company.

Creditors, who own 36 per cent of the chipmaker, are expected to sell their stake gradually next year with the expiry of lock-up restrictions that were imposed after they rescued Hynix from the brink of bankruptcy with a $4.6bn bail-out.

“Under the current domestic laws, it will be difficult for foreigners to take control of [a] high-tech company,” Mr Kim said at a news conference, noting that a legislation to prevent technology outflows is set to take effect this month.

“Finding domestic investors will be our task, although everything will be decided through consultation with creditors,” he added.

Hynix’s market capitalisation reached $15.78bn after its share price climbed more than sixfold between 2004 and 2006 to become the best-performing stock among major chipmakers.

Mr Kim said it would be difficult for a single strategic buyer to finance the acquisition of Hynix but added that a buyer could still buy control of the company through a consortium with financial investors.

Hynix’s chief executive pledged to present within the next three months a clearer vision of the company’s long-term goal to become the world’s third-largest chipmaker by 2010.

Mr Kim on Monday unveiled aggressive spending plans. Hynix plans to invest about Won4,500bn ($4.78bn) a year for the next four years to add four new 300mm chip fabrication lines and upgrade its plants.

Hynix, which is the world’s seventh-largest semiconductor company, reported $8bn in sales last year. Mr Kim said market conditions had been more “difficult” in the first quarter than expected, but forecast the company’s sales would exceed $10bn this year and $15bn in 2010.

Mr Kim said Hynix would strengthen its alliances with rivals and may re-enter the non-memory business to diversify its product mix.

Last month, Hynix signed an agreement with Toshiba on patents and supplies and a deal with Sandisk to form a joint venture.

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