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Magnachip Semiconductor Corp. may not be a household name to most of our readers, but the company has become another front in the ongoing semiconductor trade war between China and the rest of the world. Regulators in South Korea and the United States recently blocked the sale of Magnachip to Wise Road Capital, a Chinese private equity investment fund, in order to limit China’s access to advanced chip technology.
The Committee on Foreign Investment in the United States (CFIUS) at the end of last month ask The company disclosed in a statement that Magnachip will suspend its acquisition of Wise Road Capital until the government conducts a full review of the transaction. Report on June 17According to reports, the company faces more obstacles in this transaction because South Korean regulators label Magnachip OLED DDIC as a “national core technology” EE eraConsidering that Magnachip provides its DDIC to various OLED screen manufacturers in South Korea, the regulator’s assessment may be correct.
Magnachip was spun off from SK Hynix in 2004, when the company got rid of its non-memory semiconductor business. The company acquired five fabs and foundry businesses from its parent company, but had to close two of them over time. Magnachip develops and produces solutions based on analog and mixed-signal semiconductors, including display driver ICs (DDIC), switches, converters, power management ICs (PMIC), MOSFETs, and many other types of products for OLEDs of different sizes. Magnachip is a South Korean company listed on the New York Stock Exchange. It has offices around the world and sells chips for various applications to hundreds of corporate customers.
Wise Road Capital is an investor in Chinese smartphone manufacturer Hixih, which is supported by Qualcomm (and other companies). Smartphone manufacturers can benefit greatly from Magnachip’s technology, although Wise Road is unlikely to insist that Magnachip’s DDIC and PMIC be exclusively used by one company.
In March 2021, Magnachip sold its largest wafer manufacturing facility (70% of its output) and foundry business to a consortium of Korean investors for $435 million. EE era. In the same month it also enter Reached a final agreement to sell the company to China Zhidao Capital for 1.4 billion US dollars and privatize it. According to the terms of the transaction, Magnachip shareholders will receive $29 in cash per share, a 54% premium to Magnachip’s unaffected closing price on March 2, 2021. In early June, Magnachip received Cornucopia Investment Partners’ proposal to sell the company for $1.66 billion will give each shareholder $35 in cash per share.
Given the higher bid for Magnachip, management may not have to sell the company to Wise Road, and South Korean and US regulators will not have to formally block the transaction. At the same time, it is the CFIUS order that requires Magnachip to suspend trading (even before South Korean regulators contact the company), which shows how serious the US government is to prevent Chinese companies from entering advanced semiconductor technology.
In fact, the U.S. government blocked a number of transactions by high-tech companies for various reasons, including Aixtron, Micron, Lattice Semiconductor, and Qualcomm. According to reports Foreign policyHowever, this seems to be South Korea’s first attempt to do something similar. This is actually a bit surprising, because the key reliance on chip exports is South Korea, and China should be afraid of expanding into this market.
Chris Miller, an assistant professor at the Fletcher School of Law and Democracy at Taft University, wrote: “This apparent labeling cooperation between US and South Korean regulators seems strange.” Foreign policy“It is not clear whether the initial impulse to block the transaction came from Washington or Seoul. But although the two governments have only adopted temporary measures, it seems unlikely that the two governments will let the transaction pass in its current form.”
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