After the female staff member from the secretary's office set down the coffee on the table and left, Seok-won crossed one leg over the other, then began speaking as he looked toward President Yoon Ki-hoon, seated to his right.
"I thought the negotiations would take quite some time, but I'm a bit surprised to hear that you've already finished aligning the general terms."
Perhaps because things had progressed more smoothly than expected, President Yoon Ki-hoon replied with a faint smile.
"Doesn't that just show how bad things are for Hynix?"
Leaning back into the soft sofa, Seok-won asked,
"Come to think of it, I heard that Hynix requested additional funding support from its creditor group."
"Correct. As far as I know, they currently need at least 1 trillion won to upgrade their existing 8-inch production facilities and to invest in new 12-inch lines."
"Didn't they say that if the ongoing 21-to-1 capital reduction plan passes, Hynix's capital will shrink drastically from 26.2175 trillion won to 1.2653 trillion won?"
"That's right."
Seok-won shook his head as he spoke.
"They're already in a tough spot, having to write off a significant portion of the massive debt they lent to Hynix due to this capital reduction. And now they're asking to borrow another 1 trillion won—no wonder the creditors would find that frustrating."
"Even I would be angry in their position. The problem is that, with memory prices collapsing, profitability is at rock bottom. So even if they invest a huge sum as requested, there's no guarantee they'll see any returns."
At present, the memory industry has turned into a brutal chicken game, where four major players—Samsung Electronics, Micron, Infineon, and Hynix—are locked in relentless loss-making competition, each trying to drive the others out.
By dumping memory products at prices even below production cost, they were selling massive volumes, yet instead of making profits, they were only piling up enormous losses.
'But if they cut back or halt facility investments, they'd fall behind in the competition the very moment they do—and be completely eliminated. So that's not an option either.'
Even as the situation in the memory semiconductor industry became suffocating, each company continued to push forward, squeezing out every last ounce of strength, racing ahead while hoping the others would collapse first.
"It's practically no different from pouring water into a bottomless pit, so if they followed their instincts, they'd want to cut their losses and walk away immediately. But the amount of loans already tied up is enormous, and more importantly, due to government pressure—since it doesn't want a semiconductor company, a core national industry, to go bankrupt—the creditor group has no choice but to continue providing support, even if they don't want to."
At that, a faint sneer crossed Seok-won's lips.
"It's true that semiconductors are a critical necessity, used across a wide range of fields—so much so that they're called the 'rice' of modern industry."
With his arms crossed, Seok-won continued in a low, subdued voice.
"But that's not all. Hynix is one of the outcomes of the government-led big deal among major conglomerates, isn't it? If it were to default or go bankrupt, it would expose the policy as a failure—so they'll try to prevent that at all costs."
"That's certainly part of it."
"On top of that, with the newly elected president set to take office next month and the current administration having to leave the Blue House, they'll want to avoid any incidents that could leave a blemish before then."
If it weren't for these complicated circumstances, the creditor group would have pulled out long ago, no matter how much money was tied up in loans.
And Hynix would have already been declared bankrupt.
'In the end, Samsung Electronics and Hynix survived the chicken game as the winners, allowing Korea to seize control of the global memory market. Considering that, it wasn't as if the massive amount of cash was burned for nothing.'
If Hynix had been the first to fall in the memory chip chicken game, and either Micron or Infineon had emerged as the winner to form a duopoly alongside Saseong Electronics, it was certain that the future of the Korean economy would have turned out quite differently from what it is now.
Of course, regardless of political affiliation, there was no way the politicians in the Blue House and Yeouido had foreseen such an outcome or drawn up such a grand plan.
"It may be difficult to provide the full amount of additional investment needed, but at the very least, the creditor group is in a position where they must pool together hundreds of billions of won. So when we proposed taking over the non-memory and foundry divisions, it seems they accepted it right away."
Seok-won, who had been briefly lost in other thoughts, shook off his reverie upon hearing President Yoon Ki-hoon's words.
"From the creditors' perspective, it's far better to sell off part of the business and use the incoming cash to cover investment funds than to increase loans that might never be repaid."
"That's absolutely right. From Hynix's side, they didn't seem very willing about this sale, but given that they don't even have enough operating capital right now—let alone investment funds—they're hardly in a position to be selective."
"That would be the case."
Although their main focus was memory, the non-memory and foundry divisions still generated steady cash flow and held significant future growth potential, making it all the more regrettable to sell them off like this.
"We've agreed to bundle all non-memory-related assets and liabilities—including the division's workforce, Cheongju Plant lines 2, 4, and 5, as well as Gumi Plant lines 2 and 3—into a separate newly established corporation, and then transfer it to us as part of the sale."
"That should make the acquisition much smoother, receiving everything already organized like that."
Nodding slightly, Seok-won asked as if to confirm,
"We're not just taking over the personnel and facilities, but also acquiring the related technology patents as well, correct?"
"Of course. The Chairman emphasized that point several times, so we paid particular attention to it during negotiations. Fortunately, Hynix agreed to transfer all the relevant technology patents without raising any objections."
"That's quite a sensitive issue—I'm a bit surprised they accepted it so easily."
As Seok-won showed a slightly puzzled expression, President Yoon Ki-hoon grinned, revealing his white teeth.
"At first, they naturally tried to hold back as many of the technology patents as possible."
"How did you manage to persuade them, then?"
Seok-won asked, his eyes tinged with interest.
"When we said we would pay the full acquisition cost entirely in cash, without taking out any loans, the creditor group stepped in actively and pressured Hynix's management. Thanks to that, we were able to bring over all the related technology patents as well."
A faint smile formed on Seok-won's lips as he listened.
"So offering cash completely won over the creditor group."
"Typically, part of the acquisition funds is financed through loans from the creditors, but when we said we'd purchase it under the most favourable terms without any such arrangements, they had no choice but to jump at it. In exchange, even though the patents are being transferred, we reached an agreement that Hynix can continue to use them jointly without paying any royalties."
Without such an exception clause, Hynix's management would have either opposed the patent sale to the very end or tried to reduce the number of patents being transferred as much as possible.
In any case, since the plan was to acquire Hynix in its entirety once the fierce semiconductor chicken game came to an end in a few years, there would be no issue even if the patents were shared.
"Well done."
"We've reached a tentative agreement on an acquisition price of 560 billion won."
Since it was 40 billion won lower than the maximum amount he had been expecting, Seok-won nodded with a satisfied expression.
"That's a reasonable price. Let's finalize the details without dragging things out, and if there are no issues, proceed to close the deal as it is."
"Understood."
"By the way, you said the debt carried by the non-memory and foundry divisions was around 350 billion won, correct?"
As Seok-won asked as if something had just occurred to him, President Yoon Ki-hoon responded immediately.
"It may decrease or increase slightly during the final adjustments, but it won't exceed 400 billion won."
Seok-won stroked his clean-shaven chin with one hand, organizing his thoughts for a moment.
Then he soon raised his head and spoke.
"The debt is owed to the creditor group, right?"
"That's correct."
"Then tell them we'll repay it in full at the time of acquisition, so they should agree to write off half of the debt."
At that, President Yoon Ki-hoon widened his eyes and asked in return,
"You're saying we'll repay the entire debt?"
"It's not like we're short on available funds. Wouldn't it be better to take this opportunity to cut the debt in half and clear it out?"
"I understand what you're saying, but after the acquisition, we'll need to make substantial additional investments to normalize the company. Won't the expenses become too large?"
Seok-won simply smiled as if it were nothing of concern.
"I told you before. Even if we just recover the funds we've invested in Japan, more than 1 billion dollars will come in, so there's no need to worry."
"That may be true, but…"
Watching President Yoon Ki-hoon trail off, Seok-won continued,
"It's far better to take this opportunity to cut the debt in half and settle it, rather than leaving it as it is. From the creditors' perspective, they'd at least be recovering half of what are practically non-performing bad debts they've nearly given up on, so it's a win-win for both sides."
President Yoon Ki-hoon fell into thought for a moment, then nodded.
"As you said, if not now, the creditor group won't be willing to reduce the debt, so this might be the last chance to have it written down."
"That's exactly my point."
"Understood. Since it's beneficial for the creditors as well, I'll proceed with the negotiations."
In response to President Yoon Ki-hoon, he added,
"With the recent credit card bond issue, banks are trying hard to reduce the scale of their non-performing loans, so they'll likely accept the proposal without much difficulty."
"I think so as well."
"And once all the acquisition procedures are completed, we plan to separate the non-memory division and the foundry into independent entities and operate them as separate corporations, so keep that in mind when making your plans."
President Yoon Ki-hoon, who had naturally assumed the two divisions would be operated together, looked at him with a puzzled expression.
"Wouldn't combining them into one create greater synergy? Is there really a need to separate them?"
"It may seem inefficient in the short term, but in the long run, this will be a much better choice."
President Yoon Ki-hoon asked with a puzzled expression,
"If we split the corporations, the effort and costs involved will be duplicated. Even so, are you saying it's still better to separate them?"
Seok-won nodded with a confident attitude.
"Yes. What exactly does a foundry do?"
"It manufactures chips on behalf of fabless companies that don't have their own production facilities."
A fabless company, as the name suggests, refers to a business that specializes in designing semiconductor products without directly manufacturing them.
"That's right. Qualcomm and Nvidia, which produce graphics cards, are representative fabless companies."
"You mentioned that if we acquire Hynix's foundry division, we could secure stable orders from those two companies, creating a synergistic effect, didn't you?"
"I did. But when fabless companies outsource production to a foundry, what do you think they care about the most?"
When President Yoon Ki-hoon hesitated, unable to answer right away, Seok-won calmly provided the answer.
"It's the risk of their design know-how and technology being leaked."
"..."
"And if the company handling their outsourced production is also engaged in non-memory businesses that could compete with them, wouldn't that make them uncomfortable?"
To carry out outsourced production, a foundry company inevitably had to fully understand the design in question.
Even without any deliberate intent, this meant they would naturally absorb the technology of the fabless company that entrusted them with production, and it was obvious that what they learned would eventually be applied to their non-memory business.
'One of the decisive reasons Samsung Electronics fell behind TSMC in foundry market share competition was precisely this.'
As Seok-won pointed out something that hadn't even been considered, President Yoon Ki-hoon let out a low murmur.
"Now that I hear it, even I would feel uneasy about it."
Seok-won nodded.
"That's why I intend to separate the two divisions from the very beginning."
"I didn't realize there was such a deeper intention behind it… My thinking was too short-sighted."
Meeting his admiring gaze, Seok-won gave a light smile and continued,
"Then let's proceed with that framework and draw up plans to normalize both divisions."
"Understood."