SK Hynix Inc., the world’s second-largest memory chip manufacturer, is currently carrying out the initial steps to acquire Key Foundry. Since its launch, Key Foundry has established a leading position in the domestic semiconductor industry by delivering reliable, high-performance products. Key Foundry also holds a favorable position being the only dedicated chip foundry company in South Korea.
In September 2020, Key Foundry came about after Magnachip Semiconductor Corp. sold its foundry service unit and Cheongju factory. The deal’s consortium involved the local private equity (PE) firms Alchemist Capital Partners and Gravity Venture Capital. The two PE companies then led the transaction, with the purchase price reaching around 510 billion won ($450 million). SK Hynix indirectly participated during the deal by providing funding worth 207.3 billion won ($183 million) to the consortium’s PE fund.
Expanding 8-Inch Wafer Foundry Capacity
According to investment banking industry sources, SK Hynix is presently discussing with Key Foundry a potential takeover. Sources also stated that Key Foundry has already reached out to advisors, helping it manage the acquisition process. Reportedly, SK Hynix would invest an additional 400 billion won ($353.7 million), buying out the rest of the Magnachip spinoff.
At present, Key Foundry’s operations produce about 82,000 8-inch wafers monthly, offering significant advantages to SK Hynix’s foundry extension goals. Meanwhile, SK Hynix’s foundry subsidiary, SK Hynix System IC, manufactures around 100,000 8-inch wafer units per month.
Given the ongoing 8-inch foundry facility shortage, SK Hynix plans to increase its foundry capacity to solve the rippling effects. SK Hynix’s Co-CEO Park Jung-Ho previously shared that the chipmaker is considering expanding its foundry business. Park also said that the foundry expansion could advance South Korean chip designers’ technologies and fabless companies’ services.
Building the World’s Largest Chip Supply Chain
Separately, this May, the South Korean government unveiled the ‘K-Semiconductor Belt,’ a move aiming to build the world’s largest chip manufacturing supply chain by 2030. As part of the project, the government would offer semiconductor companies significant tax incentives by up to 50%. Along with the project announcement, the administration revealed that it would collaborate with local private firms.
SK Hynix and Samsung Electronics notably participated in the project, with both companies investing a combined 510 trillion won ($450 billion) support. In line with the K-Semiconductor Belt, SK Hynix would heavily increase its production capacity to improve its semiconductor sector profile. Besides ramping up its foundry operations and domestic production, the company plans to pursue advantageous mergers and acquisitions.
