Amid the deepening economic conflict between the US and China… MagnaChip Semiconductor’s Chinese…

As the US-China conflict deepens… The sale of MagnaChip Semiconductor to Chinese capital ultimately failed
MagnaChip “Cancellation of acquisition contract with Wise Road Capital because it was not approved in the US”
Are Korean companies being hit by the intensifying US-China conflict? SK hynix to acquire Intel NAND flash

MagnaChip Semiconductor, a mid-sized system semiconductor company, had been pushing to sell to a Chinese private equity fund, but it was ultimately canceled after the US-China conflict.

The Chinese private equity fund Wise Road Capital (WRC), which was trying to acquire MagnaChip due to the US government’s brakes, stopped the acquisition.

MagnaChip announced in a statement on the 14th that it had canceled the contract with Wise Road Capital because it did not get approval from the US Foreign Investment Commission (CFIUS).

MagnaChip explained, “We tried for several months, but we did not get approval from the U.S. side for the merger and acquisition, so we are ending the contract,” said Magnachip.

The U.S. government has opposed the acquisition of MagnaChip by a Chinese private equity fund, saying it poses a risk to national security.

If MagnaChip’s semiconductor technology is transferred to China, it will pose a threat to US national security.

The U.S. Department of the Treasury submitted this opinion to the Securities and Exchange Commission in August of this year.

MagnaChip is a system semiconductor company that was spun off from Hynix Semiconductor (the predecessor of SK Hynix) in the past.

MagnaChip has been working on the sale after announcing in March of this year that it had signed a contract to sell all of its stock to Wise Road Capital for 1.58 trillion won (about 1.4 billion dollars).

Although MagnaChip operates a company in Korea, it is listed on the New York Stock Exchange (NYSE), so it had to be reviewed by the US CFIUS.

Concerns have been raised about technology leakage in Korea, but it is reported that the Korean government failed to prevent the sale of MagnaChip as it did not possess the national core technology.

MagnaChip also announced a plan to invest in Korea worth 500 billion won in May this year, drawing a line that there would be no technology outflow to China.

Wise Road Capital, the main body of the acquisition, also announced in July of this year that “the MagnaChip acquisition is a pure investment that follows the logic of the market.”

However, the sale of Magnachip was ultimately canceled due to the US government’s brakes.

CEO Kim Young-joon said, “Although it is disappointing that the merger agreement has been terminated, I think MagnaChip is in a good position to create value for shareholders as an independent company. I will continue,” he said.

As Wise Road Capital halts the acquisition, MagnaChip will receive a penalty of $72 million (about 85 billion won).

In the industry, the possibility of resale of MagnaChip is being discussed, but there is also a forecast that the failure of this sale will inevitably impede business promotion in the future.

In the domestic industry, the Magnachip case clearly reveals the intensification of the US-China conflict, and they are worried about whether the M&A of domestic companies will be sparked.

It has been one year and three months since SK Hynix signed a contract to acquire Intel’s NAND business in the United States, but the Chinese authorities have not yet approved the antitrust review.

There are concerns in the industry that the sale of Intel NAND by SK Hynix could be disrupted as US-China relations worsen over the sale of Magnachip.

It is said that the acquisition may be delayed due to the delay in review by the Chinese authorities.

SK hynix also announced in October this year that it would acquire Key Foundry to expand its foundry business.

This acquisition must also pass regulatory review in each country.

Samsung Electronics has announced that it will carry out meaningful mergers and acquisitions (M&A) within three years from this year, but it is analyzed that the risk due to stricter approvals in each country will intensify as in the case of MagnaChip.

/yunhap news