SK hynix System IC to Sell 49.9% Stake in Wuxi Plant

SK hynix System IC has announced the sale of 49.9% of its ownership in its Wuxi wafer foundry to Wuxi Industry Development Group for $349.3 million, aiming to strengthen its presence in the fast-growing Chinese chip manufacturing market. According to a regulatory filing and industry insiders, SK hynix System IC recently signed an agreement to sell a 21.3% stake in its Wuxi foundry to Wuxi Industry Development Group for $149.3 million. The transaction is expected to close in October this year.

Following this transaction, Wuxi Industry Development Group plans to acquire an additional 28.6% stake by issuing $200 million in new shares.

SK hynix System IC, a wholly-owned subsidiary of SK hynix, was established in 2017 and currently holds full ownership of the Wuxi wafer foundry. After the sale, SK hynix System IC will retain a 50.1% stake in the foundry, while Wuxi Industry Development Group will own the remaining 49.9%.

SK hynix stated that the company reached an agreement with Wuxi Industry Development Group in 2018 to establish the foundry in Wuxi and follow the process outlined for the ownership transfer.

The Wuxi foundry, established in 2018, specializes in manufacturing base chips at 28nm and higher on 8-inch wafers. These chips, also known as mature or traditional chips, are widely used in automotive power management systems, display driver ICs (DDI), and IoT devices.

While the wafer foundry industry is engaged in intense competition around advanced technologies, mature chips continue to account for approximately 70% of the semiconductor market by sales due to their wide range of applications. China's burgeoning demand for mature chips, fueled by its electronics companies and electric vehicle manufacturers, has made it a major global market.

According to global industry research firm IBS, the global market for mature chips at 28nm and above is projected to more than double by 2030, reaching $28.1 billion due to explosive growth in demand from China.