SEOUL - World's No. 2 memory chip maker Hynix Semiconductor Inc is seen capable of spending a higher-than-expected 2.3 trillion won ($2 billion) in capital expenditures next year, its top shareholder KEB said on Sunday.

Korea Exchange Bank (KEB) said in a statement that Hynix should be able to fund the estimated investment and to repay about 1 trillion won in debt with its own cash, without resorting to outside financial support.

Hynix previously said its 2010 capital expenditures were likely be more than 1.5 trillion won but did not elaborate.

The South Korean chip maker had slashed its capital spending to a range of 1 trillion won this year, below 2.6 trillion won in 2008 and 4.8 trillion won invested in 2007, in a brutal two-year memory market slump.

After surviving the downturn through share and asset sales as well as new loans, Hynix reported its first net profit in eight quarters in July-September helped by a strong sector recovery.

Hynix's financial status is gradually improving, as was seen from the fact that it has repaid about 1 trillion won in borrowing by the end of this year since it received emergency fund support from shareholders early this year, KEB said.

Memory chip makers expect tight supply of dynamic random access memory (DRAM), used mainly in personal computers, next year following a reining-in of production and rising demand.

Sector leader Samsung Electronics, which ranks global No. 1 in both DRAM and NAND flash memory, said in October it would invest more than 5.5 trillion won in memory chips in 2010 on a consolidated basis, up from around 4 trillion won in estimated 2009 spending.

Earlier this month, Japanese DRAM maker Elpida Memory Inc kept its projection for flat capital spending of $600 million for the fiscal year starting in April.

Elpida itself received financial aid from banks and the Japanese government earlier this year.

KEB and other creditors-turned-shareholders of Hynix are restarting the sale of a controlling 28 percent stake in the chip maker, expected to bring in $3 billion.

They will receive preliminary bids by January 29 after advertising a public auction in newspapers on December 21.

KEB said the auction would target domestic companies, as in the previous round, and shareholders were tapping candidates to become a strategic buyer.

The earlier auction failed after only one bidder took part out of more than 40 conglomerates shareholders had invited. The sole bidder, Hyosung, finally pulled out in November.

Hynix shares have more than trebled so far this year amid the industry's rebound, easily leading the wider Seoul market's 46.5 percent gain.

(Reporting by Rhee So-eui; Editing by Paul Tait)

Electronics