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Korean Driver Chip Maker MagnaChip Cut 5% of its Workforce

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Update time : 2023-03-28 16:28:07
        As the global semiconductor market cools, South Korean drive chip major MagnaChip (MagnaChip) has announced that it will restructure and lay off 5% of its workforce due to a sharp decline in its 2022 results, according to South Korean media outlet TheElec.
 
 
        MagnaChip was founded in 2004 as a non-memory chip business of SK Hynix, a South Korean memory chip maker, and sold its wafer packaging business (now renamed Key Foundry) to SK Hynix in 2020. MagnaChip's main business is the manufacture of OLED panel driver chips and power management chips, and has provided OLED DDICs for Samsung and LG Display, and many smartphone OEMs have launched smartphones equipped with Magnachip's OLED DDICs.
        According to Omida, Magnachip's market share in the OLED display driver chip (DDIC) market will be 33.2% in 2020, ranking second in the world after Samsung Electronics. However, due to the demand for display panel driver chips in 2022 due to the decline in demand, resulting in oversupply, making Magnachip performance fell sharply. Magnachip also announced a one-week shutdown of its Gumi plant in Gyeongsangbuk-do from Feb. 25 this year.
      The company reported full-year 2022 revenue of $337.7 million, down 28.8% year-over-year, and operating profit turned to a loss of $5.25 million from $83.4 million the previous year, according to the earnings report. In terms of quarterly results, MagnaChip's profitability also continued to decline, with operating profit of $12.87 million in the first quarter of 2022, plummeting to $2 million in the second quarter, going from profit to loss in the third quarter and reaching a loss of about $10.08 million, with the loss further expanding to about $10.11 million in the fourth quarter, and expected to continue in the first quarter of this year Losses are expected to continue in the first quarter of this year.
        It is worth mentioning that on March 26, 2021, Magnachip announced that it agreed to be acquired by private equity firm Smart Road Capital for $29 per share, for a total price of approximately $1.4 billion (approximately RMB 9.2 billion at the then exchange rate). This represents a premium of approximately 75% over Magnachip's volume weighted average share price over the last three months prior to the announcement of the acquisition deal. But the deal, blocked by the U.S. Treasury Department's Committee on Foreign Investment in the United States (CFIUS), was ultimately announced as a failure.
        On December 14, 2021, Magnachip announced that the parties to the transaction announced the withdrawal of the CFIUS filing and the termination of the merger agreement, as the transaction remained unapproved by CFIUS. As a result of the termination of the transaction, under the merger agreement, Jiro Capital will pay MagnaChip a termination fee of $70.2 million.
        In 2022, LX Semicon, another major South Korean IC fab, was also originally interested in acquiring Magnachip through JPMorgan last year, but ultimately gave up due to a failure to negotiate the opening price.



 
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