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Hynix's system-LSI business reborn as MagnaChip

Posted: 13 Oct 2004 ?? ?Print Version ?Bookmark and Share

Keywords:hynix semiconductor? system-lsi? non-memory? magnachip semiconductor?

Looking to lighten its debt load and raise cash for its memory operations, Hynix Semiconductor Inc. sold off its system-LSI business last week for $828 million. A consortium of venture capitalists led by Citigroup picked up Hynix's non-memory operation, christening it MagnaChip Semiconductor Ltd, and hopes to boost profitability before taking the company public in a few years.

The deal marks the end of a mini yard sale for Hynix. Last year, the company jettisoned its LCD operations, which went to China's BOE Technology Group for about $380 million. Now that the system IC business is also out the door, along with $329 million in assumed debt, Hynix can turn its attention to being more aggressive in the memory business. Last week, the company said it would work harder to keep its eye on DRAM, flash memory (where it cooperates with STMicroelectronics) and pseudo-SRAM products.

In the last quarter of 2003, Hynix surprised industry observers by snatching the No. 3 spot in DRAMs from Infineon Technologies, mostly through aggressive sales in China that helped boost the top line by 30 percent that year. "If DRAM is good, like it is now, then they are OK, but if the market does get shaky, then you have little to fall back on," said Brian Matas, an analyst at IC Insights Inc.

As for MagnaChip, it seems the company will carve out a name for itself in multimedia. Its main product lines are CMOS image sensors and LCD drivers highly competitive markets, but also ones with high-growth potential. In addition, MagnaChip has a far-reaching supplemental offering of application processors, such as 8- and 32-bit MCUs, camera processors, Bluetooth ICs, smart-card controllers and mixed-signal chips. Foundry services are also part of the lineup.

Now that it has separated from Hynix, MagnaChip looks to become more aggressive in building product lines, said Robert Krakauer, its CFO and head of strategic operations. "Under Hynix, there were some limitations in investment in R&D and capital expenditure," he said, "so we won't have those restraints anymore." The company is profitable, doing about $300 million a year in earnings.

- Mike Clendenin

EE Times

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