ED Sell-off of chipmaker

Korea should be on lookout against technology leaks to China

Magnachip Semiconductor said it will be acquired by Wise Road Capital, a Chinese private equity fund, for about $1.4 billion. Magnachip was spun off in 2004 from Hynix Semiconductor, currently SK hynix, the world's second-largest maker of DRAM chips. The company's flagship product is the OLED (organic light-emitting diode) display driver integrated circuit (DDI). In the market for core semiconductors in TVs and smartphones using OLED panels, Magnachip is the world's No. 2 company after Samsung Electronics.

If a company like this falls into Chinese hands, Korea might end up passing on its OLED industry leadership to the world's second-largest economy. Currently, Korea enjoys a predominant status in the global OLED industry. LG Display accounts for 90 percent of the large OLED panel market for TVs, while Samsung Display accounts for a similar proportion in the small and midsize panel market for mobile devices.

Overconfidence can be dangerous, however. Korea has the bitter experience of handing over its position as the global leader in the liquid crystal display (LCD) market to China just several years ago. It began with Hynix's sell-off of its LCD business unit, HYDIS, to China's BOE in 2002. BOE absorbed HYDIS' technology and sold it off to a Taiwanese company, which later emerged as the world's No. 1 company in the LCD sector. The case of Ssangyong Motor was similar. China's Shanghai Automotive Group took over Ssangyong in 2004 and got out of it only five years later, creating a stir about the alleged theft of diesel car technology from the Korean automaker.

OLED is one of the core industries that forms the basis of the national economy. If the technology in this sector is transferred to foreign competitors, it will deal a critical blow to our national competitiveness. That explains why a petition opposing Magnachip's acquisition has appeared on the Cheong Wa Dae website. And while the deal has already been signed, Korean regulators have yet to approve it and will make a final decision after examining whether Magnachip's technology is a core national technology that deserves protection. The government should not just sit and watch a core technology that has fed the Korean people being leaked to a foreign rival.