Hynix increases investment in China ST joint venture

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 5/9/2007

As a result of Hynix's increased investment, Geneva, Switzerland-based semiconductor giant STMicroelectronics' equity investment in its joint venture wafer fab in Wuxi, China, with Hynix Semiconductor drops to 16.6 percent, from 33 percent, the company has confirmed.

According to an ST spokesman, ST has 18 months to increase its equity participation back to the 33 percent share. During this time, ST's voting rights remain at 33 percent, and if the company does not increase its financial investment in that time, its voting rights will fall to 16.6 percent, he said.

The original percentage ownership was 33 percent ST, 67 percent Hynix.

ST and Hynix announced their JV in November 2004 and inaugurated the plant in October 2006.

The ST spokesman said further, “Hynix is now investing additional funds into the JV. As part of our agreement with our partner, although we've declined to make a further investment now, we have an 18-month "grace period" during which the voting percentage does not change and we can contribute additional capital to return to the original share ownership percentage.”

In December 2006, ST announced the creation of its Flash Memories Group which incorporates all the Flash memory operations, including Technology R&D, all product related activities, front-end and back-end manufacturing, marketing and sales worldwide.

“We've also announced an effort to lower the capital intensity of our business, which will mean a lowering of our investment in fabs. We prefer to call it a Fab Lighter approach,” the ST spokesman concluded.