SK signs deal to acquire foundry chipmaker

An aerial view of SK hynix's manufacturing factory in Cheongju, North Chungcheong Province / Courtesy of SK hynix

By Kim Yoo-chul

SK hynix, the world's No. 2 memory chipmaker, signed a deal for acquisition of the country's leading foundry chip manufacturer amid the continued shortage of custom chips.

SK Group's semiconductor affiliate said in a statement, Friday, that it has agreed with Magnus Private Equity Fund (PEF) to acquire a 100 percent stake in Key Foundry for 575.8 billion won. SK is the top shareholder of the PEF, owning 49.8 percent after it invested 207 billion won at the time of the PEF's establishment in March.

Key Foundry was established after Magna Semiconductor sold its local foundry facility for 510 billion won to a consortium led by Gravity PE and Alchemist PE in March 2020.

"SK's acquisition of Key Foundry will help us expand the company's annual foundry chip manufacturing capacity by double. Plus, SK will be active in terms of stabilizing the global semiconductor supply chain and helping domestic chip designers achieve sustainable growth," SK said.

Key Foundry has manufacturing facilities to produce 8-inch wafers, which are customized for use in units for power management, display drive chips and microcontrollers. Its annual production capacity is viewed as comparable to that of SK hynix System IC, an SK affiliate foundry business. SK hynix System IC is scheduled to be moved to the Chinese city of Wuxi, where the company operates production facilities, by the end of this year.

Analysts say SK's acquisition of Key Foundry will fill the possible void from the planned relocation of SK hynix System IC in terms of manufacturing capacity, as Key Foundry is only a few kilometers from SK hynix's factory in Cheongju, North Chungcheong Province.

SEMI, an industry association, expects the monthly demand for 8-inch wafers next year will rise to 6.5 million, up by 17 percent from 2019. As all leading semiconductor companies dropped their 8-inch wafer businesses, given SK's competitive edge in terms of securing required and necessary equipment to produce such wafers, SK will benefit the most in the segment from the purchase of the foundry.

SK plans to submit the specifics of its agreement with Magnus for the acquisition of Key Foundry to overseas antitrust agencies, as the plan must obtain the required antitrust approvals prior to completing the transaction.

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