SK Hynix will decide on whether to spin off its foundry business on May 24 at the earliest or by the end of this week at the latest, according to industry sources on May 23. All eyes are on the company’s next move as it can improve its status as integrated device manufacturer (IDM) by strengthening the non-memory chip business and seek various ways to reorganize the business by using its subsidiaries.

SK Hynix said in a filing on April 27, “Although we are considering the spinoff, nothing has yet been decided.” The company also said that it will re-announce details within a month. It held an explanatory meeting about its spinoff plan for the employees of its foundry division on the 18th and completed negotiations for their incentive packages since then.

SK Hynix plans to spin off its foundry business into a wholly owned independent subsidiary and produce CMOS image sensor (CIS), display driver IC (DDI) and power-management integrated circuit (PMIC) under consignment using its 200mm wafer production line (M8) in Cheongju, North Chungcheong Province in Korea. Considering a growth potential of the foundry market, industry experts think that it would be better for SK Hynix to set up a specialized company rather than keep it as its non-core business division.

According to market research firm IHS Markit, SK Hynix’s foundry business posted 116 billion won (US$103.25 million) in sales, accounting for less than 1 percent of the total sales of 17.2 trillion won (US$15.31 billion). However, the global semiconductor foundry market grew 9.6 percent to US$49.42 billion (55.52 trillion won) last year compared to 2016, rapidly growing due to an increasing demand of non-memory chips related to the Internet of Things (IoT).

Some industry watchers say that SK Hynix intends to spin off its foundry business as a way to improve the competitiveness of non-memory chip business, carry out merger and acquisition (M&A) and reorganize the group’s governance structure.

By: DocMemory
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