SK Hynix acquires Key Foundry
- Summary
🟩SK Hynix acquires Key Foundry
South Korea’s SK Hynix, the world’s second-largest memory semiconductor company, announced that it will acquire Key Foundry, a semiconductor contract manufacturing company. At 575.8 billion won (approximately 56 billion yen), we purchased all of the shares and made Key Foundry a wholly owned subsidiary.
Strengthening the foundry business
SK Hynix’s memory business, which accounts for more than 96% of its revenue, is IDM (Vertical Integration), which is designed and manufactured in-house. On the other hand, we have been engaged in the business of undertaking production from external semiconductor manufacturers through our subsidiary “SK Hynix System IC”. SK has set a goal to double the foundry’s production capacity.
What is a key foundry?
Key Foundry is headquartered in Cheongju, South Korea, and specializes in foundry services for fabless manufacturers. We have a line of 8-inch (200mm) wafers with a monthly production capacity of 90,000 wafers. Key Foundry is a company formed in 2020 as a spin-out of MagnaChip’s foundry business. Furthermore, the Magnachip was established when the non-memory business of the former Hynix Semiconductor spun out.
*Hynix ↴ Non-Memory Division *MagnaChip↴ Foundry Division
*Acquiredby Key Foundry ↗ SkHynix
SK Hynix will buy back the businesses that were separated from SK Hynix’s predecessor. Why?
🟩 Corporate Value of Key Foundries
Key Foundry was sold from Magnachip to an investment fund in 2020 for KRW 510 billion. This acquisition is 575.8 billion won, so the sale amount increased by 67.5 billion won (about 6.5 billion yen) in one year. On an annual basis, the value of the key foundry company has increased by about 13%.
Key Foundry’s enterprise value
510 billion → 575.8 billion won
Leverage legacy process nodes
Key Foundry’s semiconductor production capacity is on the scale of 80,000 wafers per month in terms of W00mm wafers. Using legacy process nodes up to 130nm process, we mainly manufacture mixed analog and digital ICs such as display driver ICs and power management ICs. Legacy nodes’ older equipment is suitable for high-mix, low-volume production and is cost-competitive because it has already been depreciated.
🟩Summary
SK Hynix acquires a key foundry that leverages legacy process nodes to generate profits
SK Hynix’s investment in foundries in Korea follows the Korean government’s “K-Semiconductor Strategy” to double semiconductor exports. I hope that the Japan government will not only attract advanced process nodes from overseas, but also have a strategy to make effective use of existing facilities.
