MagnaChip Semiconductor Sells Foundry Business... Focuses on Display Semiconductors

[Asia Economy Reporter Changhwan Lee] MagnaChip Semiconductor, a non-memory semiconductor company, is selling its foundry (semiconductor contract manufacturing) business to a private equity fund.

MagnaChip Semiconductor announced on the 1st that it has signed a contract to sell its foundry business and Cheongju plant (Fab 4) to a domestic private equity fund.

Domestic private equity firms Alchemist Capital Partners Korea and Credian Partners will acquire the business through a special purpose company (SPC). SK Hynix invested 49.8% and the National Credit Union Federation of Korea invested 50% plus one share in this SPC. The acquisition amount is $435 million (approximately 530 billion KRW).

Employment of about 1,500 executives and employees working in MagnaChip's foundry business division and Cheongju plant will also be transferred to the acquiring institution. It is expected to take about 4 to 6 months until the transaction is completed.

MagnaChip Semiconductor is a company that SK Hynix separated and sold its non-memory division in October 2004 to focus on memory semiconductors. SK Hynix is effectively reinvesting in MagnaChip Semiconductor after about 16 years. It is known that SK Hynix highly values the growth potential of the foundry market.

MagnaChip Semiconductor stated that it will sell the foundry business and focus on its core display and power semiconductor businesses. Sales of MagnaChip's display solution business, including the organic light-emitting diode (OLED) business and power solution business, have rapidly grown by 260% and 111%, respectively, over the past four years.

Kim Young-jun, CEO of MagnaChip, explained the reason for the sale, saying, "We judged that selling the foundry business to an institution that can realize economies of scale and focusing on the display solution and power solution businesses with about $500 million in sales is the best course of action."