Heavily indebted South Korean semiconductor company Hynix has signed a memorandum of understanding to sell its TFT (thin film transistor) LCD (liquid crystal display) business to China's BOE Technology Group.
The MoU specifies a price of $US380 million for the total assets of the business, including fixed assets such as factory buildings and the company's overseas subsidiaries and sales network, although Hynix noted that the amount may change after due diligence has been performed on the business by BOE Technology.
The announcement comes just over 12 months since Hynix first announced a deal to sell its TFT-LCD business. In early September 2001, the company said it had signed a "definitive agreement" with Taiwan's Candor to form a new joint venture in which Candor would own an 80.1 per cent stake in return for $650 million. Those talks broke down for unknown reasons.
Hynix said the new agreement is expected to result in the signing of a definitive deal on October 25 ahead of completion of the transaction by the end of November.
The deal, should it be completed, would provide Hynix with some much-needed cash and also mark the further concentration of its business activities in its core area of expertise: computer memory chip production. Hynix has been selling off business units for more than a year in a desperate attempt to escape collapse under the weight of billions of dollars worth of loans.
In its most recent financial results, those for the first half of the calendar year, the company reported a consolidated net loss of 494 billion won ($411 million as of June 30, the last day of the period being reported), on the back of weak demand for DRAM (dynamic RAM) chips.
BOE Technology and Hynix are no strangers. In late 2001, BOE bought a 45 per cent stake in a new company formed when Hynix spun off its STN (super-twisted nematic) LCD operations. South Korea's Semicon Engineering took a 35 percent in Hyundai LCD while the remaining shares were distributed to employees.