(iTers News) – SK Telecom, Korea’s largest mobile service carrier, signed a buy-out deal to acquire a controlling 21.1% stake in world memory chip titan Hynix Semiconductor Inc. for 3.4267 trillion won in cash.

The buy-out deal, which was inked yesterday between SK Telecom and major creditor banks of Hynix Semiconductor, will pave the way for the service carrier to synergize its service business with Hynix’s expertise in the chip-making business to create a new source of revenues.

For Hynix Semiconductor, which has been under the receivership of major credit banks since early 2000s, the deal marks new growth opportunities not only for consolidating its position in global memory chip market, but also diversifying into new, uncharted areas of SOC chip making.

Yet, the deal was ill-timed, as the world’s No. 2 memory chip maker has been suffering from losses for several quarters in a row, falling victims to freefalls in prices of DRAM and NAND flash memory chips.

Under the buy-out agreement, SK Telecom will buy 44.25 million existing shares, or 6.4%, for 24,500 won per share, and 101.85 million new shares, or 14.7% for 23,000 won per share.

“We signed a share sale agreement with SK Telecom, which was picked as the preferred bidder for Hynix,“ said main creditor Korea Exchange Bank (KEB)

SK Telecom singlehandedly has joined the bidding for controlling shares of the memory chip maker, as the credit banks of the chipmaker have sought to sell half of their combined 15% stakes, while issuing new shares for the selling block.

Turn to SOC chips

Under the terms of the agreement, the deal will have to be finalized sometime in the first quarter of next year at least, following due diligence this month and the start of price negotiations next month.

SK Telecom said that the acquisition of Hynix would offer a groundwork to make a headlong foray into more lucrative, less volatile SOC, or system-on-chip business, as making SOC chips like application processors, brain of smartphones and tablet PCs, will compliment its service business.

The deal also proves a blessing for cash-strapped Hynix Semiconductor, as SK Telecom pledged not only to use the newly raised fund to beef up Hynix’s balance sheets, but also to invest into facility expansion and R&D projects.

On top of that, it will help the chipmaker to boost its SOC chip business to take up the slacks in the cyclically volatile memory chip business. Hynix is now producing SOC chips like LCD drive ICs and CMOS image sensors using its design expertise in memory CMOS process.

Battered by severe deteriorations in prices of memory chips, the chipmaker has been short in cash to invest into new 20nm process technology and equipment, losing competitive edge to rival Samsung Electronics.

As unit price of 2Gb DDR3 DRAM chip falls below US$60 cents, most of memory chip makers are producing chips below costs. Yet, Samsung Electronics is still making profits, as its mixture of 30nm and 20nm process technologies keeps its operations less susceptible from price freefalls.