Just days after throwing out a long-planned sell off to its main US competitor, Hynix Semiconductor has decided to split itself up to avoid being forced into a court-appointed bankruptcy.

The deal, which Hynix's board approved on Thursday, was put forward by the firm's creditors.

The creditors holding Hynix's estimated 9 trillion won ($7bn; �4.8bn) debt will swap it for a controlling shareholding in what is at present the number three memory chip firm worldwide.

They should then be able to divide up the company and sell off the parts as and when buyers come to light.

Dealing with DRAM

There remains uncertainty, though, about what will happen to the memory chip business.

Although the production of dynamic RAM chips, as they are known, is the jewel in Hynix's crown, it has also been its downfall, as massive oversupply over the past couple of years led to falling prices.

For months the company was negotiating with US chipmaker Micron Technologies with a view to selling it the operation for $3.4bn.

But on 30 April Hynix's board threw out the plan, which creditors had already endorsed.

Hynix itself wants to hang onto the DRAM operation, selling off the rest and relying on a recovery in DRAM prices to turn the company around.

Stumbling blocks

But analysts point out that Hynix could face a number of problems with this plan.

Firstly, the creditors are likely to get rid of the existing board and put their own people in place.

That should speed up the sell off process, and a new board is unlikely to be as attached to the DRAM business as the current one.

Secondly, the revival in DRAM prices has stalled in the wake of Hynix's rejection of the Micron deal, with prices slipping up to 20%.