The long saga of consolidation in the chip industry has been further muddied by news that German chipmaker Infineon is talking to South Korea's Hynix about a possible tie-up.

Hynix, badly hobbled by $6bn in debt, has for months been in on-again, off-again discussions with Micron, the US company and world number two in the memory chip market.

Reprots suggest the two are deadlocked over a price, with Micron offering around $3bn and Hynix' creditors hoping for something closer to $5bn.

Infineon has also had problems. The sharp decline in memory chip prices in recent months has devastated profitability across the sector, and Infineon has recently admitted that things look unlikely to improve in the near future.

And its own talks with Toshiba about possible co-operation came to an inconclusive end in December, after Toshiba decided to sell up to Micron.

Stalemate

With semiconductor prices on the rise again, at least moderately, memory chipmakers are keen to stabilise that position and ward off the drastic fluctuations which have been the rule.

In an interview with the Nihon Keizai Shimbun newspaper, Infineon chief executive Ulrich Schumacher said his company and Hynix were examining several possible forms of co-operation, including joint ventures.

A Hynix spokesman played down the news.

But the urgency of Hynix's situation is likely to be underscored by its financial performance in the last three months of 2001, set to be unveiled in the next few weeks.

The South Korean company is expected to have lost more than $3bn, a far worse deficit than any of its peers.