[EDITORIALS]The revival of HynixThe creditors of Hynix Semiconductor Inc. agreed at a meeting to end their joint supervision of the chipmaker. Accordingly, Hynix will emerge from the debt workout program in the first half of this year ― one and a half years ahead of schedule. What had been a troubled company with outstanding debts of 11.6 trillion won ($11.4 billion) has turned into a profitable firm with an annual net profit of 1.7 trillion won in only four years.
The revival of Hynix can be called “a Korean model of companies’ resurrection.” The view that troubled companies must be sold to foreign firms had once been prevalent in our society. But the Hynix case proves that the formula is not true. Hynix contrasts with the case of Korea First Bank. Foreign funds had purchased those companies at dirt-cheap prices when they had a temporary liquidity crisis, and then sold them at astronomical profits in only four to five years.
Hynix was almost sold to the U.S.-based Micron Technology Inc. nearly for free in May 2002. When the talks on the sale finally broke down, the foreign media said that Korea had lost the opportunity to sell a mass of trouble. But now Hynix has surpassed Micron, which had attempted to take over the local chipmaker, in profitability and global market share. Seeing such a reversal, we learn that essential manufacturing firms should be kept in our hands, even if they fall into a temporary crisis.
The prices of dynamic random access memory chips have climbed over the last four years, since Samsung Electronics Co. has focused on flash memories and Japanese chipmakers have withdrawn from the memory business. But the revival of Hynix cannot be explained only by such changes in the market. Hynix cut its workforce to 13,000 people from 22,000 people. The company also sold its non-memory operations and liquid display, telecommunications and computer lines. The shortage of funds for capital spending has been made up with the workers’ efforts. The professors of colleges of science and engineering helped Hynix revive through research on new technologies.
Now, the creditor banks, which had unwillingly swapped 5 trillion won of the chipmaker’s debt for equity, can collect more than the principal. The creditors are moving to sell a part of their shares to a new owner of Hynix. We hope that Hynix will become a company beloved by the public.