SK Holdings said Monday that it has decided to buy a controlling stake in LG Siltron, a local producer of wafers used in semiconductor manufacturing, for 620 billion won ($532 million).

As part of efforts to strength its footing in the chip business, the company said its board of directors determined to purchase a 51 percent stake in LG Siltron, which manufactures wafers for semiconductors.

Wafers are used in DRAM and flash memory chips, and power devices. "We will wrap up the takeover as soon as possible after signing a stock sale contract," said an SK official.

SK has been beefing up its presence in the chip-making sector after taking over Hynix Semiconductor, currently SK hynix, in 2011.

The acquisition, which was criticized in the early 2010s, proved to be a jackpot for the Seoul-based conglomerate, which focuses on telecommunications and energy.

For the fourth quarter of last year alone, SK hynix, whose earnings will be released later this year, is expected to net more than 1.3 trillion won in profits.

Some analysts predict that the company could chalk up as much as 7.6 trillion won in operating profit for 2017, as the market outlook is bright.

According to consultancy IC Insights, the size of the global memory chip market is forecast to reach a new record high of $85.3 billion this year, a 10.3 percent increase from $77.3 billion in 2016.

In 2015, the group also bought OCI Materials, a local manufacturer of special gases used in making chips, liquid crystal displays and solar panels, for 482 billion won.

SK Group, Korea's No. 3 conglomerate, has leading telecom operator SK Telecom, top refiner SK Innovation, and a slew of other affiliates under its wing.

From the perspective of LG Group, the conglomerate plans to spend the secured funds to nurture its next-generation cash cows.

"We opted for SK Holdings in consideration of various factors including the job security of LG Siltron employees," an LG official said.

The transaction is the first big-deal between conglomerates in two years after Samsung Group sold non-core affiliates including Samsung Techwin to Hanwha Group in 2014.

That was the first time for Samsung, the country's foremost chaebol, to unload group units since the Asian financial crisis in the late 1990s.

By: DocMemory
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