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US Blocks China’s Wise Road from Buying Magnachip
In March, Magnachip announced the and the larger of its two 8-inch wafer fabs to Wise Road, a deal worth about $435 million. Magnachip was one of the first chip makers to mass produce OLED driver chips used in smartphone displays and is #2 behind Samsung Electronics in market share. Wise Road is an investor in Huaqin, a leading Chinese smartphone manufacturer also backed by Qualcomm. Wise Road’s $1.4 billion acquisition of Magnachip was blocked by the Committee on Foreign Investment in the United States (CFIUS). According to a June 17 with the U.S. Securities and Exchange Commission, CFIUS also prohibited Magnachip from delisting from the New York Stock Exchange. A day later, Korean regulators weighed in, reportedly designating Magnachip’s OLED drivers as a “national core technology. The intervention by CFIUS in the proposed deal is unprecedented since Magnachip has little if any presence in the U.S. market beyond incorporation in Delaware and shares traded on a U.S. stock. The joint U.S.-South Korean effort to block Wise Road’s acquisition of Magnachip represents a “major extension” by CFIUS of its jurisdiction over foreign technology acquisitions, according to Chris Miller, an assistant professor at Tuft University’s Fletcher School of Law and Diplomacy. Magnachip’s technology is advanced, but it isn’t particularly unique since it supplies the same drivers for Samsung smartphone displays as does Samsung Electronics.
The Biden administration has backed off of “decoupling” economically from China, instead advocating competition while building for key technologies such as semiconductors. But the move to block the Magnachip acquisition represents a new front in U.S. efforts to limit Chinese access to advanced chip technologies. Wise Road was concerned that over the long term, Magnachip’s best customer, Samsung might not share info as freely because it was owned by Chinese affiliate, but they never considered the US government would exclude them from buying the company .
In March, Magnachip announced the and the larger of its two 8-inch wafer fabs to Wise Road, a deal worth about $435 million. Magnachip was one of the first chip makers to mass produce OLED driver chips used in smartphone displays and is #2 behind Samsung Electronics in market share. Wise Road is an investor in Huaqin, a leading Chinese smartphone manufacturer also backed by Qualcomm. Wise Road’s $1.4 billion acquisition of Magnachip was blocked by the Committee on Foreign Investment in the United States (CFIUS). According to a June 17 with the U.S. Securities and Exchange Commission, CFIUS also prohibited Magnachip from delisting from the New York Stock Exchange. A day later, Korean regulators weighed in, reportedly designating Magnachip’s OLED drivers as a “national core technology. The intervention by CFIUS in the proposed deal is unprecedented since Magnachip has little if any presence in the U.S. market beyond incorporation in Delaware and shares traded on a U.S. stock. The joint U.S.-South Korean effort to block Wise Road’s acquisition of Magnachip represents a “major extension” by CFIUS of its jurisdiction over foreign technology acquisitions, according to Chris Miller, an assistant professor at Tuft University’s Fletcher School of Law and Diplomacy. Magnachip’s technology is advanced, but it isn’t particularly unique since it supplies the same drivers for Samsung smartphone displays as does Samsung Electronics.
The Biden administration has backed off of “decoupling” economically from China, instead advocating competition while building for key technologies such as semiconductors. But the move to block the Magnachip acquisition represents a new front in U.S. efforts to limit Chinese access to advanced chip technologies. Wise Road was concerned that over the long term, Magnachip’s best customer, Samsung might not share info as freely because it was owned by Chinese affiliate, but they never considered the US government would exclude them from buying the company .
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