Fair Trade Commission "SK Hynix Approved for Kipa Foundry Acquisition"…No Concerns Over Competition Restriction

[Asia Economy Sejong=Reporter Dongwoo Lee] The Korea Fair Trade Commission announced on the 30th that it has approved SK Hynix's acquisition of K-Foundry, a domestic foundry (semiconductor contract manufacturing) company, after reviewing the case and determining that there are no concerns about market competition restrictions.

SK Hynix signed a contract to acquire 100% of K-Foundry's shares from Magnus Semiconductor for approximately 575.8 billion KRW and reported the corporate merger to the Fair Trade Commission in December last year.

SK Hynix's subsidiary, SK Hynix System IC, and K-Foundry operate 8-inch (200㎜) wafer fabs and provide mature product foundry services of 90 nanometers (nm = one billionth of a meter) or above to fabless companies worldwide. SK Hynix System IC mainly focuses on CMOS image sensors, power semiconductors, and display driver chips, while K-Foundry specializes in DDI, mixed-signal, and non-volatile memory.

The Fair Trade Commission designated the global mature product foundry market, where the two companies' business areas overlap, as the relevant market and focused on reviewing the horizontal merger aspect. It judged that concerns about competition restrictions are low since the combined market share of the two companies is only in the 5% range. Based on the entire global foundry market, the combined market share was at the 1% level.

In the mature product foundry market, alternative competitors such as Taiwan's TSMC and UMC, and the U.S.'s GlobalFoundries sufficiently exist, so the possibility of the two companies engaging in unilateral competition-restricting behavior is also considered low.

From the vertical merger perspective, competition restriction was also analyzed to be minimal, with no concerns about competition restrictions.

Before the merger, SK Hynix outsourced the production of advanced and mainstream products such as controllers to third-party companies like TSMC. The production of mature products such as CMOS image sensors was mostly outsourced to its subsidiary SK Hynix System IC. K-Foundry does not have 12-inch (300㎜) wafer fabs or advanced product process technologies, so it is considered unlikely that SK Hynix would exclude competitors by outsourcing advanced product production to K-Foundry through this merger.

The Fair Trade Commission stated, "We will review corporate mergers in innovation-based industries such as semiconductors and electric vehicles, where the pace of change is rapid, as quickly as possible to support the establishment of an innovation ecosystem."

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