By Jun Ji-hye
SK hynix is weighing whether to acquire the foundry business and fabrication line of Magnachip, a local semiconductor manufacturing company, industry sources said Wednesday.
The envisioned acquisition of the foundry business and factory of Magnachip in Cheongju, North Chungcheong Province, is widely expected to enable the world's second-largest memory chipmaker to secure expanded output and bolster its competitiveness in the non-memory business amid the downturn in the memory chip market.
"We are closely watching the situation related to the takeover battle of Magnachip, but nothing has been decided," an official from SK hynix said.
Magnachip, formerly owned by SK hynix, was sold when the firm went through corporate restructuring in 2004.
Currently, multiple foreign private equity fund operators, including Brigade Capital Management, own Magnachip with a total 79.41 percent stake.
Magnachip specializes in the chip design and manufacturing business. Among the firm's sales, the foundry business, which refers to the contract chip manufacturing service for clients that do not have fabrication lines, accounts for about 45 percent.
Magnachip was listed on the New York Stock Exchange in 2010. The market capitalization of the company stood at 320 billion won ($279 million) last year, with an operating profit of 90 billion won.
Industry sources said SK hynix is expected to actively consider taking over the foundry business and fabrication line of Magnachip, given that the non-memory chip business of SK hynix has been less competitive than the memory chip segment.
They said the acquisition of Magnachip can lower SK hynix's reliance on DRAM and NAND flash memory chips.
DRAM is a crucial part of computers, while NAND flash chips are used in mobile devices such as smartphones.
SK hynix has a foundry business subsidiary, SK hynix system ic, whose fabrication line is in Cheongju. Sources said this fabrication line and that of Magnachip in the same region will create synergy and maximize production capacity.
"If SK hynix takes over Magnachip, it will also able to absorb clients of Magnachip," a source said.
Major shareholders of Magnachip named JP Morgan as an adviser for the sale of the company and began relevant processes.
A preferred bidder is expected to be selected at the end of the month at the earliest, with acquisition costs estimated at 200 billion won to 300 billion won.
China's SMIC and Taiwan's UMC are cited as other candidates for the acquisition of Magnachip.
SK hynix is weighing whether to acquire the foundry business and fabrication line of Magnachip, a local semiconductor manufacturing company, industry sources said Wednesday.
The envisioned acquisition of the foundry business and factory of Magnachip in Cheongju, North Chungcheong Province, is widely expected to enable the world's second-largest memory chipmaker to secure expanded output and bolster its competitiveness in the non-memory business amid the downturn in the memory chip market.
"We are closely watching the situation related to the takeover battle of Magnachip, but nothing has been decided," an official from SK hynix said.
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Currently, multiple foreign private equity fund operators, including Brigade Capital Management, own Magnachip with a total 79.41 percent stake.
Magnachip specializes in the chip design and manufacturing business. Among the firm's sales, the foundry business, which refers to the contract chip manufacturing service for clients that do not have fabrication lines, accounts for about 45 percent.
Magnachip was listed on the New York Stock Exchange in 2010. The market capitalization of the company stood at 320 billion won ($279 million) last year, with an operating profit of 90 billion won.
Industry sources said SK hynix is expected to actively consider taking over the foundry business and fabrication line of Magnachip, given that the non-memory chip business of SK hynix has been less competitive than the memory chip segment.
They said the acquisition of Magnachip can lower SK hynix's reliance on DRAM and NAND flash memory chips.
DRAM is a crucial part of computers, while NAND flash chips are used in mobile devices such as smartphones.
SK hynix has a foundry business subsidiary, SK hynix system ic, whose fabrication line is in Cheongju. Sources said this fabrication line and that of Magnachip in the same region will create synergy and maximize production capacity.
"If SK hynix takes over Magnachip, it will also able to absorb clients of Magnachip," a source said.
Major shareholders of Magnachip named JP Morgan as an adviser for the sale of the company and began relevant processes.
A preferred bidder is expected to be selected at the end of the month at the earliest, with acquisition costs estimated at 200 billion won to 300 billion won.
China's SMIC and Taiwan's UMC are cited as other candidates for the acquisition of Magnachip.
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