The Hynix board Tuesday voted against a memorandum of understanding the company's management signed earlier this month with Micron, stating that the Korean chip maker intends to remain an independent concern. The decision came despite the fact that Hynix's creditors, which have a majority stake in the financially troubled company, had already approved the deal.

"We are confident that with the upturn in the semiconductor industry and new developments in our technology, it is possible for Hynix to successfully exist as an independent entity," the board said in a released statement following the vote.

In the interim, Hynix has been left in a state of turmoil as chief executive C.S. Park resigned in protest over Tuesday's board of directors' vote.

A spokesman for Micron, Boise, Idaho, would only say that the company "is evaluating the situation to determine an appropriate course of action." Micron executives were described as stunned by local Boise reporters waiting at the company's headquarters for word of the merger vote.

However, executives at Hynix in the United States said Hynix's creditors may take control of the company in May as part of a $2.3 billion debt-for-equity swap arranged last year. The creditors would then be in a position to overturn Tuesday's vote by the Hynix board.

Indeed, short of a bailout from Micron, Hynix's directors failed to address how the company would secure new financing to pay its creditors. Hopes for a continued recovery of DRAM prices appear to be misplaced, given that spot market DRAM tags, upon which Hynix is heavily dependent, have been falling steadily for several weeks after increases in March. Online pricing tracker DRAM Exchange reported Monday that benchmark 128Mbit SDRAM dropped 20 cents in one day on the spot market to $3 and could fall further.

That's not the only problem facing Hynix. Even had the vote passed, there remained a great number of details to be negotiated before the company's six DRAM would pass to Micron -- including a final sale price. Without a deal, Hynix is in danger of scaring off its largest customers, something that Sherry Garber, an analyst with Semico Research Corp., Phoenix, decribed as "a very real possibility."

Additionally, observers noted that the longer Hynix remains in a state of financial limbo, the more time will pass before the company's aging memory fabs can be upgraded. The agreement with Micron called for creditors to provide the Boise company with $1.5 billion in new financing to reequip the fabs. Even if they are upgraded, either through a Micron deal or otherwise, Garber said it will take nine months to a year before they can begin production at more competitive levels.