South Korean chipmaker MagnaChip Semiconductor trading on the New York Stock Exchange is up for sale, sparking heated interest from strategic and financial investors at home and abroad at a time when the chip industry has entered a new super cycle.
The chipmaker currently valued at $700 million by market capitalization produces display chips and chips for automobiles and power management devices. It sold its foundry business to a consortium of Credian Partners and Alchemist Capital Partner Korea backed by the nation’s second largest chipmaker SK Hynix Inc. at $435 million last year. As the chip market has entered a boom cycle on exploding demand for IT devices amid the Covid-19 pandemic, the buyout would likely turn into a hot race.
A source from the investment banking industry said many foreign firms – mostly U.S. and Chinese capital - have already expressed their interest and set up meetings with local securities and accounting firms to ready due diligence on the company’s operations in Cheongju and Gumi. Considering the shortage of chips in the market, the deal value could go higher than expected, he added.
Market analysts MagnaChip would fetch at least 500 billion won ($445.1 million) given the price tag of its foundry business that accounted for 40 percent of its sales and tight chip conditions around the world.
The business portfolio of the company is divided into two sectors – display solutions and power solutions. It produces automotive chips under power solutions division, raising the possibility of a foray into EV business. The company said last year that the display business grew 260 percent and power solution business 111 percent over the past four years.
Its revenue has also been on the rise, from $679.7 million in 2017 to $792.2 million in 2019.
Market experts speculate local rivals such as SK Hynix and DB HiTek could consider buying the company to build up economy of scale. An industry source said the government afraid of technology leaks may disapprove foreign acquisition, giving more chances for domestic firms or PEFs.
By Kang Doo-soon, Jin Young-tae and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]