Semiconductor History | Hynix Icheon, 30 April 2002 — The Board Voted Against Its Own Creditors

On 29 April 2002 Hynix's creditors approved the sale of its memory business to Micron. The next day its own board voted the deal down, unanimously, after a six-hour meeting. Micron had offered 108.6 million of its own shares, worth about 3.4 billion dollars when the memorandum was signed and about 3.07 billion by the deadline, plus 200 million dollars for a fifteen percent stake in the non-memory business Hynix would have kept. Six memory fabs would have moved: five in Korea and one in Eugene, Oregon. The combined company would have passed Samsung to become the largest maker of DRAM in the world. The board gave three reasons in its statement. It said the plan overvalued the Micron shares, understated the contingent liabilities, and took too optimistic a view of the cash flow of whatever company would be left behind. Hynix owed its creditors somewhere above six billion dollars at the time, had been renamed out of Hyundai Electronics the year before, and had already been through a multibillion-dollar rescue. Park Chong-sup, the president who had argued for the sale, resigned after the vote. Contemporary coverage ran hard the other way. It read the decision as the board killing its own company, and both the creditors and the government were furious, having spent April assembling the seventy-five percent creditor approval the deal required. A correspondent in Seoul that day described Hynix workers setting off firecrackers in the streets. What followed instead was a creditor-led restructuring, run by Korea Exchange Bank as lead bank, that took roughly four years to work through. By 2007 Hynix was the second-largest maker of DRAM in the world. The counterfactual is worth leaving open rather than settling. Had the vote gone the other way, Micron would have owned five Korean fabs and this campus, and there would be no SK hynix, because there would have been nothing for SK Telecom to buy in 2012. No contemporary account records where the board met, so this pin marks the company's registered seat at Bubal in Icheon. The photograph shows a memory module whose chips are marked hynix and KOREA. That name had existed for barely a year when parts like these were packaged, and the company came close to not outlasting it. Photo: Qurren, CC BY-SA 3.0, via Wikimedia Commons