Hynix back in shape

Kwon in balancing act for debt reduction with growth

By Kim Yoo-chul

How big a difference can 10 years make?

In point is Hynix Semiconductor, which was forced into a creditor-led debt rescheduling 2001.

Ten years later, the world’s second largest supplier of computer memory chips has just had its best year and is ready to get leaner and nimbler under the leadership of chief executive officer (CEO) Kwon Oh-chul.

Kwon is engaged in a balancing act of a sorts ― reducing debts, while ensuring sustained growth, coming in the context of the creditors-turned shareholders' move to unwind their stake.

According to Kwon’s script, the advancement in market share and rebounding demand for technology products will help Hynix to reduce its current 5.9 trillion won debt to a manageable level of 4 trillion won (about $3.68 billion) by the end of 2013.

A committee of several creditors-turned shareholders, led by the Korea Finance Corp., the Korea Exchange Bank (KEB) and Woori Bank, has restarted discussions about selling their shares of Hynix.

The sale was derailed last year after top bidder Hyosung Group, a textile maker, bowed out at the last minute.

``Our priority is finding a way to pay back more of our debts while finding enough money to invest in our facilities and develop technologies,’’ Kwon said in an interview with The Korea Times in his office in southern Seoul.

He spends most of his time in his office at Hynix’s Icheon, Gyeonggi Province, factory.

```If we can maintain our interest-bearing debt between 4 trillion won and 5 trillion won, then that would allow us to pursue our business with financial stability. We are bullish about the scale of our business as well as our continued pace in moneymaking.’’

Kwon, who took the management helm in March of last year, earned his corporate stripes in finance and strategy, unlike his predecessor Kim Jong-kap, a bureaucrat-turned industrialist.

Kwon says that his legacy will be defined just as much by his performance as a technology decision-maker.

``The current size of debt is smaller than our 6 trillion won we had in earnings before interest, tax and amortization (EBITA) at the end of last year. Of course, we can’t focus dominantly on reducing debt when semiconductors are a cash-intensive business that chews and spits out companies the moment they missed the timing. We need to be thinking constantly about return-on-equity (ROE) ratios and look to exploit the cyclical upturns in the market to keep the cash coming,’’ he said.

Hynix, which only trails domestic rival Samsung Electronics in the global memory market, is expecting strong first-quarter profit with the consumer demand for computers and mobile Internet devices like smartphones and touch-screen tablets improving, Kwon said.

Search for ownership

Kwon admits that the uncertainty at ownership limits Hynix’s boldness in investment and strategy, which could prove costly in a cut-throat industry where pace and purpose could mean everything.

The shareholders’ committee currently holds 15 percent of Hynix. SK Group is among the Korean conglomerates that have been linked to Hynix as a potential suitor as well as LG Electronics, Dongbu HiTek and even a regrouped Hyosung, although the firms have been coy about their potential interest.

Kwon declined to comment in detail citing his respect for the creditors but did add that Hynix is likely to remain a Korean company.

``Obviously, Hynix needs a qualified buyer. But the potential new owner should preferably be a Korean company as it wouldn’t be wise to letting an industrial juggernaut like this slip into the hands of another nation,’’ he said.

Hynix may be a good fit for SK, which is dabbling with technology business in an attempt to go global. Hynix’s chip-making presence can boost SK’s nascent electric vehicle business in China, industry sources say.

Hynix is also rumored to be on the shopping list of some Middle East companies armed with petrodollars, but a barrier could be Korea’s technology protection act that bans the cross-border transfer of advanced semiconductor technology, which includes anything more complex than the 60-nanometer class production skills. .

Hynix and Samsung remains as the only two chipmakers in the world that fully employs a more efficient 40-nanometer class process technology in the product of DRAM chips, which gives them the edge in cost competiveness over their Japanese and Taiwanese rivals.

Hynix recently saw its strategic alliance with Taiwan’s ProMOS Technologies fall through, although the collaboration was intended to continue through 2013, and Kwon said the company doesn’t have any immediate plans to work with another partner chipmaker.

Technological advancements

Kwon says Hynix has been making strides in next-generation semiconductor technologies, which the company will use to strengthen its presence in the growing markets for solid state drives (SSD) and other advanced RAMs like STT.

However, the company’s bread and butter will continue to be DRAM and NAND flash for the foreseeable future, he said.

A priority for Hynix is accelerating its transition toward ``thinner’’ processing technologies, Kwon said.

The semiconductor chips of today have millions of minuscule electronic circuits, which are etched into a silicon disk on a nanometer (one billionth of a meter) scale.

A smaller measurement means that the chip circuit consists of thinner electric lines, thereby having more circuits and storage in the same amount of space.

Hynix is one of the companies that are intending to migrate to thinner technology in chip production as its technological advantage allows it more room to cut production costs in the cyclical and volatile chip industry.

This will also be crucial for responding to the expected increase in the demand of chips for next-generation of digital devices such as tablet computers, a market ripped open by the Apple iPad.

``Delivering the next phase in the development of computer memory chips is proving to be difficult, although chipmakers will continue to invest in thinner production technologies to boost production efficiency,’’ said Kwon.

The company plans to mass produce 30-nanometer process technology for DRAM production during the latter half of the year, while employing a 20-nanometer process for NAND flash production. In chip-making, ``thinner’’ technologies

Hynix, which sees a continued recovery in both DRAM and NAND markets throughout this year, is rolling out more such value-added chips at a time when consumers are buying more ``all-in-one’’ mobile Internet devices like tablets.

Hynix recently signed a memorandum of understanding (MOU) with Mosaid Technologies, which will allow it to access Mosaid’s patents for six years.

Wary of `patent trolls’

Kwon also claimed that major chipmakers are combing their efforts to weed out ``patent trolls,’’ a degrading term he apparently saved for California-based technology licensor Rambus, which continues to engage in a decade-long patent feud with Hynix.

Patent trolls commonly refer to opportunistic companies that enforce their patents on those who infringe aggressively, despite lacking the intention to manufacture and market their intellectual property.

Rambus, which specializes in technology that speeds the transmission of data between computer chips, also has suits pending against other chipmakers like Samsung and Micron Technology.

Kwon points out that Rambus hasn’t been producing anything tangible and accuses the company of being an IP ambusher that is straining the industry’s innovation.

Korean technology makers have been frequently finding themselves on the receiving end of patent lawsuits as they increase their market share in major technology parts like semiconductors and flat screens.

``We are urging our competitors to inject more serious effort to ax these patent trolls. In Korea, the discussions involve not only businesspeople but also the government,’’ Kwon said.

``The results of our efforts will be revealed in a few months. We are better positioned to win the court battle than Rambus is, should it lengthen. Micron is our accidental ally in this.’’

‘하이닉스 매각은 국내기업에,’ 권오철 사장 지속적인 부채축소 통한 안정적 성장 추구

세계 2위 메모리 반도체 생산업체인 하이닉스는 지난 해 창사 이래 최고의 실적을 자랑하며 의미 있는 한 해를 보냈다. 하이닉스 권오철 사장은 최근 BusinessFocus와 갖은 단독 인터뷰에서 올 한해 추가적인 부채 축소와 함께 지속 가능한 성장을 위한 내실강화를 통해 향후 세계 최고의 반도체 업체가 되겠다는 의지를 피력했다. 더불어 하이닉스는 국내 업체에 매각 될 것임을 시사했다.

권사장에 따르면 시장점유율의 증가와 반도체 수요 증가에 따라 2013년에는 부채비율을 현재의 5.9조원에서 4조원 수준으로 줄일 수 있을 것이라고 내다 보았다.

그는 부채축소의 중요성에 대해 업계의 특성을 들어 설명했다. “부채가 많으면 불황이 올 때 그 부담이 엄청나게 커집니다. 예를 들어, 돈은 못 빌리고, 상환기일은 돌아오고, 이자는 내야 하는데 투자금이 없을 수도 있습니다. 반도체 산업은 특성상 아주 안정적인 재무구조를 필요로 합니다,” 라고 그는 말했다.

이어서 권사장은 하이닉스가 주인 없는 회사로서 직면할 수 있는 여러 가지 문제점들에 대한 심경을 토로했다. 현재 주주단을 거론하며 선호하는 매입자에 대한 구체적인 명칭은 언급하지 않았으나 하이닉스가 한국기업으로 남을 것임은 명백히 밝혔다.

그는 “소유구조와 상관없이 회사가 자생적으로 지속 성장할 수 있는 그런 기반을 만드는 것이 저의 임무고 사명이라고 생각합니다. 소유구조는 어느 주식회사나 다 마찬가지로 그 회사의 주식에 관심 있는 사람들이 사고파는 것 아니겠습니까? 또한, 미국이나 유럽의 경우에도 일부 가족이 경영하는 소수의 기업 외에는 주인이 다 없지 않습니까? 하지만 누가 가져야 된다 보다는 반도체업의 특성과 한국의 주인 체제라는 경영 문화의 특성을 생각하면 좋은 주인이 있는 것이 좋다고 생각합니다,” 라고 말했다.

현재 주주협의회는 하이닉스의 지분 15%를 가지고 있다. SK그룹, LG전자와 동부하이텍이 잠재적 매입자로 거론되고 있으며, 업계에서는 중동기업들이 하이닉스에 눈독을 들이고 있다는 소문이 돌고 있으나 최첨단 반도체 기술의 유출을 우려하는 정책당국의 견제도 만만치 않아 아직 미지수이다.

하이닉스는 현재 삼성전자와 함께 40나노급 DRAM을 생산할 수 있는 유일한 기업이다. 또 솔리드스테이크디스크(SSD)와 수직자기형 비휘발성메모리(STT) 등 급성장 중인 시장을 선점하기 위해 차세대 반도체기술의 개발을 하고 있으나, 당분간 주수입원은 여전히 모바일 DRAM과 NAND Flash일 것이라고 말했다.

하이닉스는 하반기에 DRAM생산을 위한 30나노미터 기술의 대량생산을 계획하고 있다.

권오철 사장은 마지막으로 하이닉스를 포함한 반도체 업체들이 현재도 분쟁 중에 있는 램버스의 하이닉스 특허침해 소송과 같은 특허분쟁을 제거하기 위해 노력하고 있다고 밝혔다.

그는“세계 반도체 업체들이 이에 관해 논의를 하고 있습니다. 한국에서도 정부가 주도를 하고 민간기업들이 참여해서 논의를 하고 있습니다. 미국에도 IBM, Intel도 골치 아플 겁니다. 이런 부분에 대해서는 공동 대응이 필요하다는 것은 서로 잘 알고 있습니다,” 라고 말했다.

미국 반도체 칩 개발업체인 램버스는 현재 삼성이나 마이크론과 같은 반도체 업체에게도 소송을 제기한 상태이다.