Korea and the US Likely to Conclude MagnaChip Sale Review Next Month

[Asia Economy Reporter Jeong Hyunjin] The review by the South Korean and U.S. governments on the acquisition of MagnaChip Semiconductor by Chinese capital is expected to conclude as early as next month. Although approval from the Chinese government has already been obtained, attention is focused on whether the deal can pass the antitrust authorities of South Korea and the U.S., as the U.S. and China continue their sharp rivalry over semiconductor dominance.

According to industry sources on the 13th, MagnaChip recently disclosed to the U.S. Securities and Exchange Commission (SEC) that its Korean subsidiary submitted sale-related documents to the Ministry of Trade, Industry and Energy (MOTIE) on the 20th of last month. This submission followed a letter sent by MOTIE to MagnaChip on June 16, a month prior, requesting the company to file for merger notification and approval under Article 11-2 of the Act on Prevention of Leakage and Protection of Industrial Technology. With MagnaChip submitting the related documents to MOTIE, the process to determine whether the company’s organic light-emitting diode (OLED) driver chip (DDI) technology qualifies as a national core technology and whether the acquisition will be approved is set to proceed. The decision on the sale approval is expected as early as next month.

The U.S. antitrust authorities, who began their investigation first, plan to decide on approval by no later than September 13. The Committee on Foreign Investment in the United States (CFIUS), which reviews whether foreign capital investments in U.S. companies affect national security, started examining the MagnaChip acquisition in May and ordered a halt to all sale-related procedures until the investigation is complete in mid-June. Although there were market expectations that CFIUS would announce its findings by the end of last month, CFIUS has sent a letter to MagnaChip stating that the review will be completed by September 13.

If neither the South Korean nor the U.S. government extends the review period separately, the results are expected to be announced next month. This comes about six months after the Chinese private equity fund Wise Road Capital signed a $1.4 billion (approximately 1.6 trillion KRW) acquisition agreement with MagnaChip in March. The sale of MagnaChip requires approval from antitrust authorities in South Korea, the U.S., and China, with China’s State Administration for Market Regulation (SAMR) having already announced its approval in June.

However, since CFIUS is focusing its review on national security, and the Biden administration pressured the Netherlands last month to stop exporting key semiconductor equipment to China, continuously showing efforts to curb China’s semiconductor rise, it is expected to be difficult to clear the U.S. hurdle. An industry insider said, "If either South Korea or the U.S. does not approve, the sale will fall through, so the U.S. government’s approval will be a factor influencing MOTIE’s decision." MagnaChip has stated that it is "closely consulting with the U.S. and South Korean authorities."

This content was produced with the assistance of AI translation services.