The Newly Established Split Corporation DB Fabless (Tentative Name) Will Not Go Public
DB HiTek is making a fresh start as a foundry company through a business structure reorganization that spins off its design business (fabless) into a subsidiary.
On the 7th, DB HiTek held a board meeting to discuss the agenda of spinning off the brand business division responsible for semiconductor design. This move aims to actively resolve conflicts of interest with customers that inevitably arose while running the design business concurrently and to focus capabilities on the foundry business. Jo Gi-seok, CEO of DB HiTek, stated, “In line with the strategic direction of global foundries, we will separate the foundry and fabless businesses to further enhance their respective expertise and strengthen competitiveness in the global market.”
The method chosen for the spin-off is a physical division. DB HiTek explained, “By making the new company a 100% subsidiary, all the new company’s performance will be reflected, so there will be no revenue decline due to the spin-off. Rather, we can expand the business into high value-added product groups that the existing brand business could not enter, and in the mid to long term, we expect performance improvements from the new company’s entry into new businesses.”
They added, “For the new company as well, having DB HiTek, which has abundant semiconductor business experience and foundry capabilities, as the parent company will secure a stable foundry supply chain and increase synergy.”
The New Company Will Not Be Listed
DB HiTek had previously halted the spin-off review last year in September, judging it inappropriate to proceed without the government’s general shareholder protection policy being finalized. The renewed push for a physical division after six months is based on the judgment that institutional measures to protect general shareholders have now been established, such as the promulgation of the Enforcement Decree of the Capital Markets and Financial Investment Business Act at the end of last year, which includes provisions for granting stock purchase rights.
DB HiTek plans not to list the newly spun-off company. If listing becomes unavoidable, the articles of incorporation will be amended to require shareholder approval through the parent company DB HiTek’s general shareholders’ meeting. Additionally, the company decided to increase dividends per share to 1,300 KRW, three times last year’s amount, and separately plans to repurchase treasury shares worth 100 billion KRW.
The name of the new company spun off through this physical division will be ‘DB Fabless (tentative),’ with the division base date set as May 2. This agenda will be finalized through a special resolution at the regular shareholders’ meeting held at the end of this month. Shareholders opposing the spin-off can exercise their stock purchase rights for 20 days starting from the 30th.
Meanwhile, after spinning off from DB HiTek, which is centered on the foundry business, ‘DB Fabless’ plans to expand its business area, which had been limited to display driver ICs (DDI) for LCDs, a general-purpose product, into high value-added OLED driver ICs, and also pursue entry into the high-performance semiconductor market such as mini LED TV driver ICs.
DB HiTek recruited Hwang Gyu-cheol as head of the brand business division in May last year, appointed him CEO of the brand business division at the end of the same year, and launched a dual CEO system for the foundry and brand business divisions. Through this spin-off, the business division, which had been operated almost independently, will be legally and completely separated. Hwang Gyu-cheol, CEO of DB Fabless, expressed his determination, saying, “We will enhance synergy with the parent company DB HiTek and grow into the ‘second MediaTek.’”
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