Welcome to the semiconductor industry's version of the long-running potboiler, featuring executives from Hynix and its creditors, Infineon, Micron, Samsung, Korean government officials, and journalists across three continents.
Here's the plot: A distressed family dynasty [Hynix] seeks to ally with a strong suitor [Micron] to save the DRAM kingdom. Also embroiled are a half-willing rival suitor [Infineon] and a cousin [Samsung] volunteered by the family patriarch [Korea's government]. The Hynix-Micron union needs the blessing of the real matchmaker [Hynix's creditors], who won't assent for
anything less than a sizable dowry.
The courtship is taking place not just in boardrooms but also in public through numerous leaks to the press. The scenes have played out in the United States and Korea, various potential outcomes have been analyzed in research reports, and thousands of headlines have been written since journalists first latched on to the story.
Infineon recently pulled out of the running and Samsung doesn't want the ailing Hynix, but it looks like the Korean government would like to rope in the world's No. 1 DRAM maker. Two weeks ago, a Korean minister said he would prefer to see a Hynix-Samsung union. In some countries, that would have resolved the issue. The bride would quietly obey, marry the government's choice, and the other suitors would fade away.
However, this is a complex international alliance in the making, and right now the Hynix-Micron saga is becoming an oddity, an embarrassing addition to corporate merger folklore. That the parties involved are public companies doesn't mean one of the biggest possible mergers in DRAM market history had to be conducted in this tawdry fashion in the town square.
Conspiracy theorists haven't entered the fray yet, but given time they'll probably give their sig-nature twist to the Hynix-Micron discussions. Questions popping up include why Micron, an experienced deal maker that recently bought a Toshiba plant without a peep from anyone, seems to be allowing this unending and very public display of its affection for Hynix.
And DRAM prices have climbed over the last few weeks, partly on the basis that a Hynix-Micron union would eliminate some of the industry's excess manufacturing capacity. If this transaction falls apart at a time that prices have risen enough to bolster Hynix's cash position, one could be forgiven for questioning the participants' actual commitment to the deal. In other words, was this merely a ploy to boost depressed memory prices?
In today's climate, in which corporate actions are coming under intense investor scrutiny, it is in Hynix's and Micron's best interests to quickly wrap up this deal or scuttle it. Hynix shareholders, creditors, and the Korean government should get together and resolve their disputes. They don't have to go through with the deal, but it will surely help if they announce a firm decision soon. Micron hasn't commented much since it first offered to buy the Hynix facilities, but it should now take the next step: sweeten the pot or get out.
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