Cancellation of Stock Sale Agreement Due to US Technology Leakage Concerns
Withdrawal of Ministry of Industry's Sale Approval Review
[Sejong=Asia Economy Reporter Kwon Haeyoung] The sale of MagnaChip Semiconductor to Chinese capital has ultimately fallen through. After the U.S. blocked the sale, MagnaChip terminated the stock sale agreement. Since the technology held by the company is not advanced enough to prevent overseas sales, there is an interpretation that the U.S. concerns about technology leakage to China are considerable. SK Hynix has also recently faced difficulties importing advanced semiconductor equipment into China due to opposition from the White House, making the damage to Korean companies from the U.S.-China conflict a reality.
According to the government and related industries on the 14th, MagnaChip terminated the stock sale agreement with Wise Road Capital after the U.S. Committee on Foreign Investment in the United States (CFIUS) disapproved the sale. The application for sale approval review to the Ministry of Trade, Industry and Energy will also be withdrawn.
In March, MagnaChip signed a stock sale agreement to sell all its shares to Wise Road Capital, a Chinese private equity fund, for $1.4 billion (approximately 1.66 trillion KRW). However, the U.S. CFIUS, which began investigating in May amid efforts to curb China's "technology rise," judged it to pose a national security risk, causing the deal to collapse. Although MagnaChip is a Korean company, it is listed on the U.S. stock market, so approval from both the Korean and U.S. governments is required for the sale.
Initially, the Korean government tentatively judged that MagnaChip did not possess national core technology and saw no grounds to block the sale. However, as the U.S. raised its level of checks against China, it hastily designated OLED DDI (Display Driver IC for Organic Light Emitting Diodes) technology as "national core technology," creating grounds to block the sale.
As U.S. sanctions against China intensify, cases where Korean companies fall directly under the influence or become scapegoats are expected to increase. SK Hynix also attempted to introduce advanced semiconductor equipment from the Dutch company ASML into its Wuxi plant in China, but the U.S. opposition has put a halt to this.
An industry official said, "Our companies are stuck between the U.S. and China with no way to move," adding, "The impact of U.S.-China tech competition or becoming scapegoats will continue going forward."
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