MagnaChip Files Reconsideration Request with US CFIUS on Sale... "Additional Review Until End of Next Month"

CFIUS Deemed 'National Security Risk' Last Month
Reexamination by October 28, Possible 45-Day Extension Later

[Asia Economy Reporter Jeong Hyunjin] MagnaChip Semiconductor has requested the Committee on Foreign Investment in the United States (CFIUS), which judged that there is a 'national security risk' regarding the sale to a Chinese private equity fund, to review the case again. Although the U.S. government's decision was effectively seen as a cancellation of the sale, it is interpreted that MagnaChip is trying to turn the situation around by using the reconsideration option.

On the 14th (local time), MagnaChip announced through a disclosure document submitted to the U.S. Securities and Exchange Commission (SEC) that it applied for a reconsideration of the sale case to CFIUS on the 10th. MagnaChip withdrew the document submitted on June 11 and resubmitted it, requesting CFIUS to review options that could mitigate the part judged as a national security risk.

Three days after MagnaChip resubmitted the documents, on the 13th, CFIUS accepted the request and responded that it would conduct a re-examination and make a new decision by the 28th of next month, MagnaChip explained. If no conclusion is reached by the 28th of next month, there is still a possibility that CFIUS will conduct an additional 45-day review. MagnaChip added that it cannot make any assurances regarding the outcome.

Earlier, the U.S. Department of the Treasury sent a letter to MagnaChip on behalf of CFIUS last month, stating, "CFIUS has identified a risk to U.S. national security arising from the sale of MagnaChip." After MagnaChip signed a stock purchase agreement worth $1.4 billion (approximately 1.6 trillion KRW) with the Chinese private equity fund Wise Road Capital in March, CFIUS launched an investigation into the sale in May and released the results of the three-month investigation.

[Image source=Reuters Yonhap News]

MagnaChip's request for reconsideration is interpreted as a response to the Treasury Department's letter last month, which stated that additional information, such as proposals to permanently mitigate national security risks, could be submitted for further review. Some have evaluated that it would be realistically difficult for the U.S. government to reverse its judgment that the sale poses a threat to national security, but MagnaChip expressed its intention to proceed with the sale and, after external legal consultation, decided to strengthen the documents and undergo the review once again.

Once the reconsideration process for MagnaChip is completed, CFIUS is expected to forward the decision to U.S. President Joe Biden for final confirmation.

The MagnaChip sale requires approval from all related countries, including the U.S., South Korea, and China. Earlier, China's antitrust authority, the State Administration for Market Regulation (SAMR), announced in June that it approved the sale. MagnaChip must also undergo an export approval review for 'national core technology' by the Ministry of Trade, Industry and Energy in South Korea.

MagnaChip was established in 2004 when Hynix Semiconductor (now SK Hynix) spun off its system business division. It was acquired by Citigroup Venture Capital and listed on the New York Stock Exchange (NYSE) in 2011. Last year, it sold its foundry (semiconductor contract manufacturing) division and currently designs and manufactures semiconductors for communication, Internet of Things (IoT), automotive applications, including OLED DDI.

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