Stake Sale Likely to Lead to Technology Outflow
The planned sale of Magnachip to China is causing controversy with the U.S.-China competition in the semiconductor industry intensifying.
The South Korean semiconductor manufacturing company signed the contract with Beijing-based Wise Road Capital last month. The price of the company is estimated at 1.5 trillion won or so and the South Korean and Chinese governments are yet to approve the deal.
According to some industry insiders, the sale of the stake is likely to lead to technology outflow because the Chinese consortium signed the contract in order to take Magnachip’s know-how and expertise. Magnachip is a leading player in the OLED display driver IC industry and is developing and producing power semiconductor products as the second-largest company behind Samsung Electronics in the industry.
Unionized Magnachip workers staged a sit-in on April 8, expressing concerns that the mistake of Hydis would be repeated as a result of the sale of their company. “Hynix Semiconductor, which is SK Hynix now, separated its LCD business unit as Hydis, and it was sold to BOE in 2002 and then to a Taiwanese company in 2008 after technology outflow and intense restructuring,” they said, adding, “As a result of the process, Chinese companies narrowed their gap from South Korean companies from 10 years to zero and began to outrun them in the global LCD industry.”
At present, Magnachip products are used in Samsung Display and LG Display OLED products. “Display driver ICs are indispensable for the purpose of driving displays,” an expert remarked, continuing, “The market volatility will further increase with the core OLED technology in the hands of China, which is currently relying on imported OLED DDIs.”