Hynix on the ropes

— 12:15 AM on May 7, 2002

Back in January, I mentioned that Micron was looking to purchase the debt-ridden memory giant Hynix. The deal took form, was presented to the Hynix board of directors, and on April 30, the board proceeded to toss it out on its ear. Since then, things have continued to spiral out of control. The creditors are upset, and the Korean government is urging creditors to cut their losses.

The choice of Hynix's board of directors just strikes me as illogical. I don't see where it benefits anyone. The liquidation looming on the horizon also leaves questions about how the DRAM market will respond. I wonder how high prices will during the short-term aftermath. I also wonder if the loss of output from Hynix might provide other memory manufacturers an opportunity to enjoy higher prices by choosing not to fill the output gap left behind.

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