Hynix sees deal with Micron could take time

SEOUL: The chief executive officer of Hynix Semiconductor Inc said a deal on

the current alliance talks with US Micron Technology Inc could take longer than

expected, local media reported on Sunday.

"We are targeting a deal in January, but the time could be moved (beyond

that) as there remain differences to be narrowed," Yonhap News Agency

quoted Park Chong-sup as telling employees in an in-house newsletter. Hynix

officials were not immediately available for comment.

Micron and Hynix, the world's second- and third-ranked memory chipmakers,

started talks in December on an alliance which would re-shape the battered

industry, as their combined output capacity exceeds that of market leader

Samsung Electronics Co Ltd.

Sources close to the deal had said Hynix planned to sell the entire memory

business to the US rival, but pricing differences were delaying a deal, which

could be worth anywhere from $2 billion to $6.5 billion. "We received a

proposal from Micron, but cannot reveal what that was about," Park was

quoted as saying. "Please understand there still remain further talks and

procedures to go through before reaching an MOU."

Citigroup unit Salomon Smith Barney are advising Hynix and Goldman Sachs are

advising Micron on the merger negotiations. Analysts expect the two sides to

take months to convert a memorandum of understanding, if reached, into a binding

deal.

EBN, an online semiconductor news service, said on Saturday even a

preliminary Micron-Hynix agreement would send a strong message to the market

that the free-swinging days of DRAM (dynamic random access memory) price cutting

may be fading away.

Sherry Garber, a Semico Research Group analyst, said DRAM producers were

repositioning their sales units in a sign that DRAM prices, which have already

increased in recent weeks, could climb higher following a Micron-Hynix deal, EBN

reported.

Steve Appleton, chief executive of Micron, was in South Korea last week for a

third round of talks, and rumours that both sides would sign a memorandum of

understanding around January 21 to buy Hynix's memory units boosted its share

price early on Friday.

(C) Reuters Limited.