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MagnaChip to devote $441 mn from M&A deal to upscaling facilities in Korea
Date
2021.05.24

According to Pulse by Maeil Business News Korea,

South Korea-based display and power chip maker MagnaChip Semiconductor Corp. is spending more than 500 billion won ($441 million) from the $1.4 billion buyout fund on R&D and facility upgrade in Korea by 2025, the company’s chief executive Kim Young-joon told Maeil Business Newspaper on Tuesday.

Kim stressed the company attracted a pure-play financial investor from overseas, not China, amid concerns about technology leak to China from the sale.

The investment will create an economic effect worth about 2 trillion won, Kim added.

MagnaChip spun off from Hynix Semiconductor (currently SK hynix) in 2004 is dedicated to display drive ICs and automotive chips. Its shares are traded on the New York Stock Exchange. The company is headquartered in Delaware, but it has a plant and R&D centers in Korea.

On Mar. 28, a controlling stake in the company was sold in a take-private, all cash deal worth about $1.4 billion to Beijing-based Wise Road Capital and its partners. The transaction immediately triggered a controversy over a potential technology leak to China, which is eager to overtake Korea in display and semiconductor areas.

Wise Road is headquartered in Beijing, but the buyout money will come from global limited partners connected to the fund and the transaction is not subject to regulatory approvals in China because it is an offshore deal, Kim said, denying previous reports the company would be sold to Chinese investors.

Unlike industry concerns, OLED technology is delivered in the form of a black box encrypted by a display company, therefore it is difficult for DDI semiconductor companies like MagnaChip to even access it, Kim explained.

The MagnaChip transaction represents a partnership deal from a pure financial investment perspective and long-term survival scheme, he said, adding the deal will serve to promote development in lagging fabless ecosystem in Korea.



By Lee Jong-hyuk and Minu Kim


Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.



Source: Pulse by Maeil Business News Korea (My 20, 2021)

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