For the past ten or so years, the name Hynix has been readily associated with financial difficulties. That's because of five years of workout and ten years of negotiations to sell off its assets.

 

But now the company has been transformed as a blue-chip company with the debt-to-equity ratio as low as 54 percent. The corresponding ratio for Samsung Electronics is 30.95 percent. The stock price of SK Hynix has doubled within a year, with its market capitalization ranked at third after that of Samsung and Hyundai Motor.

 

Since founding in 1983, Hynix (Hyundai Electronics at the time) has received huge amounts of investment from the parent group Hyundai. Even during the 1997 Asian financial crisis, it enlarged its size by acquiring the financially insolvent LG Semiconductor. After 2000, however, the situation reversed. Hyundai Electronics went independent from Hyundai Group in 2001 after the dispute among the sons of Hyundai founder Chung Ju-yung who died in the same year. 

 

Amid a situation in which the investment requirement in the industry was getting bigger, the company found it increasingly difficult to finance the money for investment. By the end of 2000, its debt-to-equity ratio soared to 283 percent and it posted net loss of 1.91 trillion won in 2001. After a workout program began in October 2003, creditors converted their debt into equity, increasing the number of shares to 5.2 billion, which led it to a penny stock as low as 100 won a share in 2003. A series of capital reduction and capital increase helped the company reduce its debt ratio to 71 percent in 2005. But it soon soared back to 234 percent in the first quarter of 2009 after taking losses for seven consecutive quarters from the fourth quarter in 2007.

 

The momentum for the company's recovery was given in February 2012 when it was acquired by SK Group. Thanks to the group support, it could invest 3.85 trillion won in 2012, up 10 percent from the previous year. It also engaged in acquisitions of overseas firms such as Ideaflash of Italy and Link A Media Devices (LAMD) of the United States. Fortunately for the company, Japan's Elpida Memory went bankrupt, reducing the number of the world's memory chip suppliers to four, turning the whole market into a seller's market.

 

In the second quarter of last year, SK Hynix recorded an operating profit of 1.11 trillion won, breaking the 1-trillion-won level for the first time. Although its 1-trillion-won operating profit record was broken in the fourth quarter last year due to a fire in its Wuxi plant, it is again earning more than 1 trillion won in the first and second quarter of this year. Thanks to the excellent financial performance, the company's debt ratio improved to 91 percent in 2012 from 119 percent in 2011. As of the end of last year, it was 59 percent, followed by 54 percent as of the end of June this year.