Wise Road’s Acquisition of Magnachip and China's Strategy for Display Driver IC Development
South Korea’s Magnachip Semiconductor announced on March 29 that it would accept the acquisition proposal of Wise Road Capital, a Chinese private investment fund. The all-cash transaction has an equity value of approximately US$1.4 billion. Although the Committee on Foreign Investment in the United States (CFIUS) issued an interim order on June 15 blocking the deal, this deal has been put on hold. But, if the deal goes as planned, Magnachip shareholders will receive US$29.00 in cash for each share of Magnachip's common stock they currently hold, while Wise Road will acquire Magnachip’s OLED (Organic Light-Emitting Diode) display driver IC design business and 8-inch wafer facility (Fab 3) located in Gumi. This report analyzes the implications and significance of the acquisition and then discusses China’s strategy to develop a display driver IC supply chain through this acquisition.
1.THE REASONS WHY MAGNACHIP WAS SOLD
1.1 After the Sale of the FSG Business Group, Magnachip is Constrained by Insufficient Wafer Production Capacity
1.2 The SPG Business Group Faces Customers Withdrawing from the LCD market, which Directly Impacts the SPG Business
1.3 The OLED Market Surge Could Offer Magnachip a Way Forward
2.WHY A CHINESE FIRM ACQUIRED MAGNACHIP
2.1 Excellent IC Display Driver Design Capabilities and Complete IDM Manufacturing Experience
2.2 China Has Strong OLED Panel Production Capacity
2.3 China Aggressively Develops Its Domestic Display Driver IC Industry
2.3.17
China to Reduce Reliance on Imported LCD Display Driver ICs to Become a Major Supplier
2.4 M&A Activity to Build Stronger Display Drive IC Design Capabilities
2.4.1 Qingxin Huachuang Acquired Synaptics' TDDI Business, and Later Merged With Will Semiconductor
2.5 The Chinese Government Strongly Subsidizes the Foundry Industry, and Nexchip Uses a 12-inch Fab to Expand Production
2.5.1 China Provides Tax Relief for Semiconductor Companies, and Nexchip is Building a 12-inch Foundry Production Line
2.5.2 Nexchip Receives Strong Government Support for Continuous Production Expansion, with a Monthly Production Target of 80,000 to 100,000 Wafers
4. MIC PERSPECTIVE
Appendix
List of Companies
1.1 After the Sale of the FSG Business Group, Magnachip is Constrained by Insufficient Wafer Production Capacity
1.2 The SPG Business Group Faces Customers Withdrawing from the LCD market, which Directly Impacts the SPG Business
1.3 The OLED Market Surge Could Offer Magnachip a Way Forward
2.WHY A CHINESE FIRM ACQUIRED MAGNACHIP
2.1 Excellent IC Display Driver Design Capabilities and Complete IDM Manufacturing Experience
2.2 China Has Strong OLED Panel Production Capacity
2.3 China Aggressively Develops Its Domestic Display Driver IC Industry
2.3.17
China to Reduce Reliance on Imported LCD Display Driver ICs to Become a Major Supplier
2.4 M&A Activity to Build Stronger Display Drive IC Design Capabilities
2.4.1 Qingxin Huachuang Acquired Synaptics' TDDI Business, and Later Merged With Will Semiconductor
2.5 The Chinese Government Strongly Subsidizes the Foundry Industry, and Nexchip Uses a 12-inch Fab to Expand Production
2.5.1 China Provides Tax Relief for Semiconductor Companies, and Nexchip is Building a 12-inch Foundry Production Line
2.5.2 Nexchip Receives Strong Government Support for Continuous Production Expansion, with a Monthly Production Target of 80,000 to 100,000 Wafers
4. MIC PERSPECTIVE
Appendix
List of Companies
