OLED Driving Chip Technology, Belatedly Designated as National Core Technology... Sale Review to Begin Soon
[Sejong=Asia Economy Reporter Kwon Haeyoung] The government has established grounds to intervene in the sale of MagnaChip Semiconductor. The company's core technology was suddenly designated as a national core technology. Companies designated with core technologies must undergo government review before being sold. As the government directly intervenes in the previously expected smooth sale of MagnaChip to China, this is expected to escalate into a global semiconductor supply chain restructuring issue.
On the 9th, the Ministry of Trade, Industry and Energy announced a partial amendment to the "Notice on Designation of National Core Technologies," newly designating two technologies in the semiconductor and electrical/electronic fields as national core technologies and expanding the scope of one display technology currently designated as a national core technology.
Specifically, ▲ DDI design and manufacturing technology for driving HD-level or higher display panels ▲ ultra-high-performance electrode or solid electrolyte-based lithium secondary battery technology with 600mAh or more per gram were newly designated as national core technologies. While designating OLED DDI technology as a national core technology, the driving technology was added to the previously designated ▲ AMOLED (Active Matrix Organic Light Emitting Diode) panel design, process, and manufacturing (excluding module assembly process technology) technology.
This measure targets MagnaChip, which decided to sell all its treasury shares to Wise Road Capital, a Chinese private equity fund, for $1.4 billion. The newly designated national core technology, "DDI design and manufacturing technology for driving HD-level or higher display panels," corresponds to MagnaChip's key technology. Companies holding national core technologies must obtain approval from the Ministry of Trade, Industry and Energy when pursuing overseas sales.
Accordingly, following the United States, our government is expected to soon begin reviewing the sale of MagnaChip. Initially, the Ministry of Trade, Industry and Energy tentatively judged that MagnaChip did not possess national core technologies and saw no grounds to block the sale. Although MagnaChip's OLED DDI technology is highly competitive, it was not considered advanced enough to prevent the sale.
However, as the U.S. stance to curb China's technological rise became more serious, the government shifted to applying the brakes for the time being. The U.S. government has been monitoring the sale of MagnaChip to Chinese capital and ultimately initiated a review last month through the Committee on Foreign Investment in the United States (CFIUS). It is reported that a conclusion will be reached as early as next month or around September at the latest. MagnaChip must obtain approval from both the Korean and U.S. governments to proceed with the sale.
An industry insider said, "Even if our government approves the sale of MagnaChip, if the U.S. blocks it, the M&A will automatically fail," adding, "The government's move to designate national core technology is a strategic measure in preparation for the possibility of U.S. disapproval, and ultimately, the U.S. decision will be a variable that influences our government's decision."
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