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Hynix finalizes sale of chip operation

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SEOUL, South Korea — Hynix Semiconductor Inc. said Wednesday it has completed the sale of its non-memory chip operation for 954.3 billion won ($827.6 million) to the venture capital arm of Citigroup Inc., winning a crucial source of cash to expand its memory-chip facilities.

The non-memory chip unit makes semiconductors for flat-panel displays and camera-equipped mobile phones. It accounted for 232 billion won ($201 million), or nearly 18 percent, of the company's total sales in the first quarter.

In June, Hynix and the Citigroup unit signed an agreement for the sale, which was part of the South Korean company's efforts to raise cash and reduce debt following three years of financial strain.

Hynix, the world's second-largest producer of memory chips, hopes to catch up with its South Korean rival — Samsung Electronics — by modernizing production facilities after years of under-investment.

"Hynix further aims to focus on its core memory business . . . and further extend its leading position in the semiconductor market," it said.

The sale should reduce Hynix's debt-to-equity ratio to approximately 80 percent from the 110 percent level as of the end of June, the company said in a statement.

The 190 creditors that control the company had been in talks with Citigroup Venture Capital Equity Partners to unload its non-memory chip operation since early last year.

The Citigroup unit had initially offered 400 billion won ($347 million) but later raised the offer after this year's sharp increase in chip prices drove up Hynix's value. Global demand for personal computers and electronics is recovering from a long slump, pushing up chip prices.