MagnaChip Signs Agreement for Sale of Foundry and Cheongju Plant
The Korea Federation of Community Credit Cooperatives and SK Hynix each contributed capital.
Restructuring of business structure centered on OLED driver chips and power semiconductors


MagnaChip Semiconductor announced on March 31 that it had signed a contract to sell its foundry business and Cheongju Plant (Fab 4) to a special purpose company (SPC) established by domestic private equity firms Alchemist Capital Partners Korea and Credian Partners.

The transaction was concluded at a total enterprise value of approximately US$435 million (about 530.4 billion won), including approximately US$344.7 million in cash and retirement provisions for employees whose employment is retained. The employment of approximately 1,500 employees working in the foundry business unit and the Cheongju plant will be retained by the acquiring company, and the transaction is expected to take about 4 to 6 months to close.

The Korea Federation of Community Credit Cooperatives and SK Hynix invested 50%+1 share and 49.8%, respectively, in Magnus Private Equity Fund (PEF), established by Alchemist Capital Partners Korea and Credian Partners. In 2004, Hynix Semiconductor spun off its non-memory semiconductor business into MagnaChip to overcome management difficulties.

MagnaChip CEO Kim Young-joon announced that instead of “selling the foundry business, which accounts for 40% of the company’s revenue, to an institution capable of realizing economies of scale,” the company would “focus on the display solutions and power solutions businesses, which account for 60% of the business and generate about $500 million in revenue.”

MagnaChip is a supplier of non-captive OLED display driver chips that does not own panel manufacturers. According to IHS Markit, the smartphone OLED display market is projected to grow at an average annual rate of 14% over the next four years.

It also supplies products such as battery FETs (Field Effect Transistors), Superjunction MOSFETs, IGBTs, and power ICs. The power business is experiencing continuous market growth driven by expanding demand for new applications, including IoT and electric vehicles (EVs). In particular, the EV IGBT chip market is expected to grow at an average annual rate of 18% over the next four years.

The 8-inch factory (Fab 3) in Gumi is operational for the production of power products and non-OLED display products. MagnaChip plans to expand the monthly wafer production capacity of the Gumi plant from the current approximately 30,000 wafers to 50,000 wafers in the future, and intends to expand its power solution product line to include EVs and autonomous vehicles. The company plans to increase production efficiency by manufacturing power discrete products at the Gumi plant, while operating OLED display products and power IC products as fabless products.