SK hynix mulling complete acquisition of former foundry unit of Magnachip

SK hynix is considering a complete takeover of domestic foundry company Key Foundry, of which it holds a 49.8 percent stake in, industry sources said Tuesday.

Key Foundry was separated from Magnachip last year, and become an independent 8-inch wafer foundry firm operating in Cheongju, North Chungcheong Province.

SK hynix currently controls 49.8 percent of the company via a private equity fund set up by Magnus PEF. The rest – a 50 percent stake plus one share-- is held by the fund’s another investor, MG Community Credit Cooperatives. SK hynix has spent 207 billion won ($183 million) for that investment in March last year.

Key Foundry’s relation with SK hynix goes back to 1979, when it originally belonged to LG Semiconductor, which specialized in foundry.

The then-LG affiliate merged with Hyundai Electronics in 1999 and became Hynix.

In a major debt restructuring in 2004, Hynix sold off its non-memory unit to an overseas investor, which was Magnachip.

Magnachip owned it until 2020, when the unit was sold to the Magnus fund.

Key Foundry recorded 165 billion won in sales last year.

Industry sources speculate that the chipmaker would buy shares held by the private equity firm or credit cooperatives to raise its stake for complete management controls.

Sources say the world’s No. 2 memory chip producer after Samsung Electronics could fork out some 400 billion won to take over the stake owned by MG.

The move seems to back up what SK hynix Vice Chairman Park Jung-ho said during a speech given at a ceremony for Korea’s national plan for the semiconductor industry, held at Samsung Electronics’ campus in Pyeongtaek, Gyeonggi Province, last week.

Park said SK hynix was considering various measures including mergers and acquisitions to reinforce its foundry by doubling its capacity.

SK hynix has a foundry unit called SK hynix system IC that accounts for a mere 2 percent of the chipmaker’s entire sale. The subsidiary‘s capacity is estimated to be 90,000 wafers to 100,000 wafers per month.

If the acquisition goes as planned, SK hynix would have a monthly capacity of up to 200,000 wafers.

Although the 8-inch foundry process technology is deemed outdated compared to the latest 12-inch foundry tech, demand for 8-inch has surged in recent years in line with the growing demand for power management integrated circuits and display driver ICs that are mainly produced on 8-inch foundry, as the world sees more electric vehicles and IT devices.

“The company is considering multiple measures to expand the foundry business, but nothing is not confirmed yet,” a spokesperson from the chipmaker said.

By Song Su-hyun (song@heraldcorp.com)