Magnachip Semiconductor Corporation is reviewing all strategic options, including sale and merger, for its display business and discontinuing the business.

Magnachip announced on the 12th that it will transform into a pure power semiconductor business to achieve higher profitability and maximize shareholder value.

With this decision, MagnaChip will review all strategic options for its display business, including sale, merger, establishment of a joint venture, licensing, and discontinuation, and the display business will be classified as a discontinued business in its first-quarter earnings to be announced in May 2025.

“This is a very difficult decision for the Board of Directors and management, considering our valued customers and employees,” said Young-Joon Kim, Magnachip’s CEO. “As the company’s priority is to maximize shareholder value by securing sustainable profitability, we will focus on our power semiconductor business to achieve break-even (based on EBITDA) by the end of the fourth quarter of 2025, adjusted operating profit in 2026, and free cash flow in 2027. These goals will help us achieve our 3-3-3 strategy to achieve a 30% gross margin and $300 million in sales within three years.”

While the display business is primarily focused on the smartphone market, the power semiconductor business supplies products to a variety of markets, has a long product life cycle, and is highly predictable due to less volatility in industry growth rates.

Magnachip's power discrete and power IC businesses are expected to achieve revenue of $185 million in 2024, growing 13% year-over-year. The company expects sales growth through 2025 as well.

Since entering the power semiconductor business in 2007, MagnaChip has launched next-generation power semiconductor product lines including Gen 5 and Gen 6 IGBTs, Gen 6 SuperJunction MOSFETs, and Gen 8 medium- to low-voltage MOSFETs.

In 2025, we plan to launch more than 40 new products, including 27 new products announced separately.

The newly released Gen 6 and Gen 8 power products offer 30% higher performance than existing products, and the reduced die chip size increases the number of usable die per wafer by more than 30%.

These innovative product families open new high-value market opportunities in automotive, industrial, AI, and high-current applications above 100KW, and are expected to optimize MagnaChip’s Gumi manufacturing facility to generate higher revenue per wafer.

Magnachip plans to invest approximately $65-70 million (approximately KRW 100 billion) over the next three years to optimize its Gumi plant and upgrade its facilities, focusing on its power semiconductor business.

Recently, Magnachip secured $26.5 million (approximately KRW 38 billion) by signing an Equipment Financial Credit Agreement that provides loans secured by the company's existing assets.

The interest rate for this loan is 3.97%, adjusted quarterly, and has a 10-year term with interest-only payments for the first two years and installment repayments for the following eight years.

The loan is expected to positively impact the company's product roadmap as it invests in new equipment to upgrade and optimize its Gumi manufacturing facility.

Additionally, the company's cash reserves can be managed efficiently through investments made through loans.
br /> “After an in-depth review of the business, MagnaChip’s board of directors and management have decided to focus on the revenue growth and profit potential of our Power Discretes and Power IC businesses,” said Camillo Martino, Chairman of the Board of MagnaChip. “We believe the actions announced today demonstrate our commitment to maximizing shareholder value. The Board is deeply disappointed with the Company’s financial performance and shares the frustration of investors. However, we remain determined to get MagnaChip back on track to profitable revenue growth.”

Magnachip expects that this transition will create higher profitability and shareholder value.