The Committee on Foreign Investment in the United States (CFIUS) is planning to wrap up its review of Chinese private equity firm Wise Road Capital’s acquisition of South Korean chipmaker Magnachip by September 13.
CFIUS has previously rejected acquisition and merger plans of Chinese companies such as Alibaba and Tshinghua Unigroup. In June, UK private equity firm Cornucopia Investment Partners also made a rival bid for Magnachip.
Magnachip was formed when it split off from Hynix Semiconductor (now SK Hynix). The company was acquired by US firm Avenue Capital.
The chipmaker manufactures OLED display driver IC and power management ICs. Last year, it posted 566.1 billion won in sales and 40.7 billion won in operating income.
In March, it signed a contract with Wise Road to be sold to the Chinese firm.
There were concerns in South Korea that core chip and OLED technologies could be leaked to China.
However, OLED display driver is not considered a core national technology by South Korea’s Ministry of Trade, Industry and Energy. Magnachip also has less than 50% market share in the sector, which means the transaction is not subject to anti-trust authorities in the US or China. The Chinese government approved the deal last month.
However, CFIUS halted the deal in June, saying it will review national security applications of the deal.
Biden administration has laid out policies to promote the US semiconductor industry, while tension between the US and China shows no sign of easing.
Cornucopia had offer to buy Magnachip for US$35 per share, US$7 higher than Wise Road’s offer.
A Magnachip spokesperson said the UK firm has not offered specific terms besides the acquisition price as of yet.
Cornucopia will likely turn in related documents after CFIUS’s review is complete, they said.
