Title LG acquires Silconwoks
Date   2014-05-29                                           

Memo
LG acquires Silconwokss

 On May 23, the LG Group announced that it decided to acquire Silicon Works, which is the nation’s largest fabless semiconductor company that designs display driver ICs. 
Therefore, the LG Group’s semiconductor business is getting a lot of attention once again. In particular, experts are saying that the fourth-largest company in Korea will be further strengthened, since semiconductors can offer a huge synergy potential to its cell phone and auto components businesses. LG’s move is raising the possibility of the purchase of Dongbu HiTek, which was offered for sale. 
The conglomerate already bought a 16.52 percent stake in Silicon Works previously held by Comet Network, which is the largest shareholder of the soon-to-be merged company, along with a 2.89 percent stake owned by LG Display. The size of the takeover is estimated at 86.5 billion won (US$84.5 million). Mr. Ha Kook-sun, who is the nephew of Ha Jung-im, the late wife of LG’s honorary Chairman Koo Ja-kyung, owns a 95 percent stake in Comet Network. Silicon Works has been classified as one of the LG Group families. Through the M&A deal it will be officially incorporated into LG Group, and thus it will be possible for Silicon Works to expand its business.  
An LG associate explained, “Silicon Works’ technical skills in designing driver ICs for small and medium-sized displays for smartphones and table PCs, LED driver ICs, sensor ICs for automotive applications, and touch ICs are expected to increase our competitive advantage in our flagship business and businesses that we promote in the medium term.”
Much attention is being paid to whether or not LG’s semiconductor business will kick into high gear after the deal. Previously, the company expressed its position by saying, “We are not doing any kind of semiconductor business.” However, the firm is said to have been engaged in various kinds of semiconductor businesses so far. In particular, the LG Group seems to be actively involved in the fabless semiconductor industry. 
The prime example is Odin, LG’s own octa-core application processor (AP). The company is running a research center for SIC so that it can feature its AP in LG phones. LG Electronics has already finalized the development of the processor, and is reportedly considering when it should mass-produce the chipset.
LG Group also holds a 64.8 percent stake in LUSEM. The maker of LCD driver ICs for HD displays is a joint venture between LG and Japanese-based LAPIS Semiconductor, which owns a 30.5 percent stake. Synergy between LUSEM and Silicon Works is expected in the future. LG Electronics Vice Chairman Koo Bon-joon reportedly had a discussion with his Japanese counterpart to develop a power management integrated circuit, which is an essential part for mobile devices, displays, and energy storage systems. 
The reason for the possible acquisition of Dongbu HiTek by LG Group lies in the fact that LG’s semiconductor design capability and Dongbu HiTek’s manufacturing capacity can create synergy. Dongbu HiTek recently began to mass-produce and supply LED driver ICs for smartphones to Kinetic Technologies, a US-based fabless company specializing in the design and development of mixed-signal power management semiconductors. LED driver ICs generate light for smartphone screens and LEDs used for camera flashes, and control the brightness of those screens and LEDs. They will be likely to be used in mid to low-range phones, which are expected to be increasingly popular in emerging countries like China and India. Dongbu HiTek will make an effort to develop an AMOLED driver IC for mobile devices.
LG Group also owns LG Siltron, the nation’s largest producer of wafers for semiconductors as its affiliate.


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