HOPES of job creation at the former LG Semicon factory in Newport were dashed this morning.

The empty factory, which has never seen any production, was thought to have been bought by another company.

But reports now indicate that it has been excluded from the deal. The factory is owned by the debt-ridden Hynix corporation, whose assets are about to be bought by US firm Micron Technology.

It now seems clear that only South Korean firm Hynix's active production lines are involved in the deal and that the Newport factory has been excluded.

LG sold the empty factory to Hynix, formerly Hyundai, in a £1.3 billion merger deal following a slump in the microchip industry and a slide in the Far East economy. But Hyundai never made a go of it either and the factory has stood as an embarrassing symbol of dashed hopes.

LG came to Gwent a few years ago in Europe's biggest inward investment plan, promising 6,000 jobs on the Imperial Park site at Duffryn at two factories - LG Electronics and LG Semicon.

The former factory now employs around 2,300 making TV cathode ray tubes but the other is a cavernous shell.

Hynix has been trying to find a buyer and this morning's news means nothing has changed.

Suggestions that it could be used as a car plant have been ridiculed by economists specialising in the auto industry.

It was in 1999 that Hyundai announced it would continue with the suspension of work at the LG factory.

As a result of what it called "rapid changes in technology" Hyundai also believed the plant might have to be upgraded. Since then the factory has been mothballed. The worldwide microchip industry is volatile and hugely complex.

Rick Hsu, a semiconductor analyst in Taiwan, is reported this morning as saying that the Micron takeover will reduce the production supply for the medium term.

He said Micron might have to shut down as much as a third of Hynix's production lines to upgrade them, leading to a reduction in the overall supply of DRAM - random access memory - chips.

The Welsh Development Agency has been monitoring the fate of the Newport factory.