By Kim Yoo-chul
SK hynix, the world’s second-biggest maker of DRAM memory chips, is bidding to take over Japan’s Elpida Memory, which has filed for bankruptcy protection.
``SK hynix has submitted a letter of intent (LOI) to acquire Elpida,’’ SK hynix said in a regulatory filing to the Korea Exchange (KRX), late Friday. The company filed the plan with Nomura Securities, the lead manager for the deal, it added.
``SK hynix will make a final decision after participating in due diligence,’’ the filing said. Park Hyun, a spokesman for the Korean firm, declined to unveil further details on the issue.
Local financial markets are divided over the firm’s intentions for Elpida as doubts have been raised that the Korean chipmaker will finally drop its ambitious bid after checking the Japanese chipmaker’s critical details.
Affected by the news, shares of SK hynix dropped by 4.1 percent Friday to end at 29,250 per share on the nation’s main bourse.
If SK hynix does complete the acquisition, it will threaten the bottom line of industry leader Samsung Electronics.
As of the end of the fourth quarter last year, Samsung saw 44.3 percent of the global demand for DRAM chips used in conventional PCs with SK hynix with 23.3 percent.
SK hynix is the latest chipmaker to confirm interest in Elpida after Idaho-based Micron Technology and fellow Japanese chipmaker Toshiba.
``SK hynix’s plan will hurt investor sentiment in the short-term as it requires huge cash investment. We think SK hynix has stronger intent to acquire key information from Elpida during due diligence,’’ said a fund manager from a U.S.-based investment bank in Hong Kong by telephone.
He looks after ``billions of dollars’’ of SK hynix stocks and stressed the bank doesn’t have any imminent plans to change its position of the firm’s investment portfolio. ``We will see what happens, first, and an action plan will be made according to the situation,’’ he said.
The manager declined to comment officially as the view was a personal one, not that of the bank.
The plan comes after SK Group, the new owner of the formerly-named Hynix Semiconductor, has vowed its full support for the memory chip business. SK Group Chairman Chey Tae-won is directly handling the management of SK hynix with co-CEO Kwon Oh-chul.
In Hynix, SK Group has acquired another future growth engine on top of its core businesses of energy and telecommunications.
The group, which has been struggling overseas, can accelerate its global business management by combining competence and synergy in telecommunications and semiconductors.
The company is mulling the possibility of building another plant in Wuxi, Jiangsu Province, where SK hynix’s key Chinese facility is located, to boost the production output amid rising calls from key customers such as Apple, Dell and Hewlett-Packard.
``It makes sense that SK hynix is looking at the possibility of acquiring Elpida Memory considering the Korean chipmaker's bullish moves to increase its global shares amid the recovery of chip-embedded consumer products,’’ said Song Myung-sup, an analyst at leading local brokerage Hi Investment.
But Song said the chances are ``very low’’ for SK hynix to complete the deal, finally, as it is shifting its management focus to profitable chips such as NAND flash memory and customized system chips.
``SK hynix wants to check key information of Elpida and also plans to check moves by its bigger overseas rivals such as Toshiba and Micron Technology. This is a strategic decision by the Korean chipmaker,’’ said Song.