After a six-hour meeting, the board concluded there were too many flaws in the deal worked out by Hynix and Micron executives in tandem with creditors, who participated in some of the negotiating sessions. "The plan overestimates the value of the Micron stock to be paid for the sale of Hynix's memory business; unrealistically presumes the size and timing of contingent liabilities; and is too optimistic in its estimate of the cash flow of the remaining company," the board said in a statement. In response, Hynix Chief Executive Officer Park Chong Sup tendered his resignation.

Micron is willing to give Hynix 108.6 million shares of stock, worth close to $3.5 billion at the time offered, and a $200 million investment for a 15 percent stake in its non-memory business, which would be the sole remaining entity. In the week since the two sides signed a memorandum of understanding, Micron shares have slid to about $26 from roughly $30, making the price tag seem less attractive in the short-term.

The deal would have made Micron the largest DRAM maker, pushing it ahead of rival Samsung Electronics Co. Ltd. That looks unlikely to happen now, according to a Hynix spokesperson, who doubted further talks with Micron would happen. The Boise-based firm had set an April 30 deadline for the deal — worked out over five months — to be approved by Hynix creditors and its board. Micron officials could not be reached for comment.

The rejection leaves Hynix little choice but to go it alone, and that is what the board intends it to do, despite its estimated debt of $6.5 billion. "We are confident that with the upturn in the semiconductor industry and new developments in our technology, our business competitiveness has improved and, therefore, we have concluded that it is possible for Hynix to successfully exist as an independent entity," it said, adding "the sale of Hynix's memory business may be a meaningful option in and of itself, but it is not the best option for the interested parties."

Board members criticized the restructuring plan for "placing too much liability" on Hynix's non-memory IC operations, which is a side business that takes in less than 30 percent of Hynix's revenue. The plan also overestimates the "revenue and cash flow of the remaining company," the board said.

Conspicuously missing from the statement was any indication of how the company would survive on its own. To do so, it would need to immediately set about the costly business of upgrading its fabs and building new, multi-billion dollar state-of-the-art fabs using 300mm wafers. Its main rivals, namely Samsung and Infineon Technologies, have already done so or are in the process, and so have some of its much smaller competitors, such as Powerchip Semiconductor Corp and Nanya Technologies of Taiwan.

The original deal called for Micron to upgrade Hynix's existing fabs with $1.5 billion in fresh loans from Hynix creditors — presumably at favorable interest rates. After the board rejection, creditors indicated they would not extend more loans to Hynix and a government financial regulator said the company's survival would be determined by the market.