SK Hynix in $492 million Key Foundry deal, doubles foundry capacity

SK Hynix Inc., the world’s second-largest memory chipmaker, said on Friday it is acquiring a 100% stake in South Korea-based Key Foundry for 576 billion won ($492 million), a move that will double its contract manufacturing capacity.

SK Hynix said in a statement it has signed a contract to take over the entire stake from Magnus PEF, a joint fund between two Seoul-based private equity firms -- Alchemist Capital Partners and Gravity Private Equity.

The 8-inch wafer foundry makes semiconductors such as power management integrated circuits (PMICs), display driver ICs (DDICs) and microcontroller units (MCUs).

Located in Cheongju, North Chungcheong Province, Key Foundry has the capacity to produce 82,000 wafers a month.

SK Hynix, which currently runs a foundry business through its subsidiary SK Hynix System IC, said the acquisition will double the company’s total foundry capacity to about 200,000 wafers.

“We’re strengthening our foundry capabilities to enhance our system semiconductor competitiveness, stabilize the global chip supply network and support the Korean fabless ecosystem,” said an SK Hynix official.

The company said the deal is subject to approval by related authorities in major countries.

Established	In 1979 as LG Semiconductor Inc.
Spin-off	In Sept. 2020 from Mangnachip
Sales as of 2020	165 billion won ($141 million)
Major process node	110 nm
Monthly wafer production capacity	82,000 units
Top shareholder	Magnus PEF

BACK TO HYNIX IN 17 YEARS

SK Hynix is retaking the ownership of Key Foundry, which it sold off in 2004 due to financial difficulties.

Key Foundry is a spin-off of the foundry division of Magnachip Semiconductor, which itself was spun off from Hynix Semiconductor, the predecessor of SK Hynix. Magnachip was created after the former Hynix operations were sold to Citigroup’s venture capital arm.

In May, SK Hynix Co-Vice Chairman and Co-CEO Park Jung-ho said the company is looking into various options, including M&As, to expand its foundry capacity.

The move comes as global chipmakers join the race to ramp up facilities for made-to-order chips.

US chipmaker Intel said in March it plans to become a major foundry player in the US and Europe, while Taiwan Semiconductor Manufacturing Co. (TSMC), the market leader, has vowed to significantly increase its capacity over the years.

On Thursday, Samsung Electronics Co. said it aims to triple its foundry chip production capacity by 2026 through a facility ramp-up at its Pyeongtaek plant.

The global foundry market is forecast to grow to $151.2 billion by 2025 from $107.2 billion this year, according to semiconductor market research firm IC Insights.

Write to Su-Bin Lee at lsb@hankyung.com
In-Soo Nam edited this article.