MagnaChip announced it would be selling off its foundry services and manufacturing facility for $435 million on Monday. The South Korean semiconductor company is selling its assets to a consortium led by Alchemist Capital Partners Career Company and Credian Partners. The group will manage its new holdings under a special purpose company.
Wall Street responded very favorably to the transaction; the firm’s stock price rose by 29.85 percent after the deal went public.
Foundry Sale Details
The consortium will pay MagnaChip $345 million in cash to acquire its assets. The remaining $90 million will go to statutory severance liabilities connected to the 1,500 employees affected by the transaction.
Notably, semiconductor manufacturing giant SK Hynix is part of the consortium that is buying MagnaChip’s foundry business. J.P. Morgan Chase also had a hand in the deal, acting as an advisor to the seller.
Both parties expect to complete the transaction within 4 to 6 months.
Last February, MagnaChip conducted a strategic review of its core businesses, which is producing analog and mixed-signal chips. Subsequently, the firm decided to streamline its operations and improve its financial picture by selling off its foundry service and production facility.
The manufacturer will utilize the capital from the sale to pay off debt and bolster its balance sheet.
MagnaChip to Pursue Electric Car and MicroLED Opportunities
MagnaChip also has plans to expand its holdings within two lucrative sectors. The firm wants to utilize its power products portfolio to pursue opportunities in the electric vehicle industry. Research and Market estimates the battery-powered auto component segment will be worth $157.4 billion by 2025.
In addition, the semiconductor company wants to leverage its position as a leading manufacturer of OLEDs to establish a presence in the microLED market.
Notably, Facebook just inked an exclusive licensing agreement with British microLED maker Plessey. The social media giant wants to use the firm’s technology to build a mainstream augmented reality (AR) headset. Apple also had eyes on the display manufacturer before it forged a partnership with Facebook.
Given Big Tech’s interest in AR tech, the South Korean company could land a very lucrative production contract if it can develop some appealing microLED innovations.
By streamlining the corporation’s operations and pursuing two emerging markets, MagnaChip’s leadership has ensured their organization’s long-term success.