South Koreas 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 Magnachips 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 Chinas strategy to develop a display driver IC supply chain through this acquisition.
List of Topics
- Background behind Chinese private equity fund Wise Road Capital's acquisition of Magnachip, touching on several reasons why it was sold
- Analysis of why Wise Road Capital wants to acquire Magnachip from the industry and government perspectives and its implications
Table of Contents
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
2.3.1 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. Analyst Perspective
Appendix
List of Companies
Samples
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Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- BOE
- FocalTech
- Hefei Construction Investment Holdings
- Himax
- Huawei
- LG Display
- Magnachip
- Magnus Semiconductor
- Nexchip
- Novatek
- Powerchip Semiconductor
- Qingxin Huachuang
- Samsung
- Silicon Works
- SK Hynix
- Synaptics
- UMC
- Will Semiconductor
- Wise Road Capital
Methodology
Primary research with a holistic, cross-domain approach
The exhaustive primary research methods are central to the value that the analyst delivers. A combination of questionnaires and on-site visits to the major manufacturers provides a first view of the latest data and trends. Information is subsequently validated by interviews with the manufacturers' suppliers and customers, covering a holistic industry value chain. This process is backed up by a cross-domain team-based approach, creating an interlaced network across numerous interrelated components and system-level devices to ensure statistical integrity and provide in-depth insight.
Complementing primary research is a running database and secondary research of industry and market information. Dedicated research into the macro-environmental trends shaping the ICT industry also allows the analyst to forecast future development trends and generate foresight perspectives. With more than 20 years of experience and endeavors in research, the methods and methodologies include:
Method
- Component supplier interviews
- System supplier interviews
- User interviews
- Channel interviews
- IPO interviews
- Focus groups
- Consumer surveys
- Production databases
- Financial data
- Custom databases
Methodology
- Technology forecasting and assessment
- Product assessment and selection
- Product life cycles
- Added value analysis
- Market trends
- Scenario analysis
- Competitor analysis
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