Tears from the Kim Dae-jung government’s pressure… Dream of LG again after 20 years

In the past, LG’s independently developed semiconductor chip AP ‘Nuclean’ [사진=LG전자]

LG Electronics(115,000 -0.43%)The so-called ‘pan-LG family’ such as the LX Group and the LX group are increasingly moving toward expanding their semiconductor business. In 1999, in a big deal led by the government, ‘LG Semiconductor’, which was handed over to Hyundai Electronics in tears and mustard, became what it is today. SK hynix(107,500 -1.83%)For LG, who has watched the process of growing into a new technology, semiconductors must have been a painful finger. However, as global demand for semiconductors continues to rise, LG Electronicsand LX Group are jumping into the market again after overcoming the pain of the past.

LG ElectronicsPromotion of self-procurement of semiconductors for vehicles

According to the semiconductor industry on the 7th LG Electronicsrecently received ‘ISO 26262’ certification for automotive semiconductor development process from ‘TUV Rheinland’, a German testing and certification organization. This certification is an international standard for automotive functional safety by the International Organization for Standardization (ISO) established to prevent accidents caused by system errors of electric and electronic devices mounted on vehicles.

LG Electronicshas established a vehicle semiconductor development process such as electronic control unit (ECU), microcontroller unit (MCU), and power management semiconductor (PMIC). In particular, in this certification, the ability to develop parts with the highest level of automotive safety integrity (ASIL) D grade was recognized among automotive functional safety. LG Electronicsintroduced.

ASIL is classified into 4 levels from the lowest grade A to the highest grade D according to the severity, frequency, and controllability of accidents. This is the strictest grade.

LG Electronics promotes internalization of automotive semiconductors [사진=LG전자 제공]

LG Electronics promotes internalization of automotive semiconductors [사진=LG전자 제공]

LG Electronics‘s automotive semiconductor business is being promoted under the leadership of the SIC Center in the Chief Technology Officer (CTO) division in charge of prior technology development. As a future growth engine, we are developing auto parts businesses such as powertrain and infotainment. LG Electronicsplans to maximize the synergy effect in the electric field business by securing the capability to develop semiconductors for vehicles.

Frank Juettner, CEO of TUV Rheinland Korea, said, “LG Electronicsis expected to play a key role in the future automobile industry by successfully establishing the automotive semiconductor development process and securing functional safety.” LG Electronics The head of the SIC Center (Vice President) emphasized, “We will continue to secure the system and capability to develop the world’s highest level of functional safety for automotive semiconductors, a key component of automobiles.”

The expansion of the semiconductor business of LX Group, an axis of the Pan-LG family, seems to have gone one step further. LX Group Chairman Koo Bon-joon became independent with some affiliates after his nephew, LG Group Chairman Koo Kwang-mo, took over the management rights. LX Holdings(9,910 0.00%)was launched LX HoldingsLX International (formerly LG International), LX Hausys (LG Hausys), LX Semicon(Silicon Works), LX MMA (LG MMA), and LX Pantos (Pantos) are subsidiaries or sub-subsidiaries.

Among them, the system semiconductor company, the group’s main company, LX Semiconhas established itself as a representative fabless (semiconductor design) company in Korea. LX Semiconrecorded an operating profit of 369.6 billion won (consolidated basis) last year. This is an increase of about four times compared to the previous year. LX SemiconIn the first quarter of this year, operating profit also reached 127.9 billion won, an increase of 115.9% compared to the same period of the previous year. LX SemiconThanks to this speeding, the LX group also grew in size. LX Group’s assets increased by 24% from 8.93 trillion won at the end of 2020 to 10.374 trillion won at the end of last year, jumping up to the top 40 in the business world.

LX SemiconIn response to the remarkable growth of the company, LX Group began to lay its foundation as a full-fledged semiconductor company by reviewing the acquisition of MagnaChip Semiconductor (hereinafter referred to as “MagnaChip”), which was recently put up for sale in the merger and acquisition (M&A) market. the magna chip SK hynix(At the time, Hynix Semiconductor) was spun off in October 2004 when the non-memory division was reorganized to focus on memory semiconductors.

Koo Bon-joon, Chairman of LX Group / Photo = Reporter Kim Beom-jun

Koo Bon-joon, Chairman of LX Group / Photo = Reporter Kim Beom-jun

MagnaChip, listed on the New York Exchange (NYSE) in the United States, has its headquarters and production facilities in Korea, but its major shareholders are American hedge funds. Last year, Wise Road Capital, a Chinese private equity firm, sought to acquire MagnaChip at a cost of about $1.4 billion (about 1.78 trillion won), but the acquisition was canceled due to the US government’s brakes.

MagnaChip focuses on organic light emitting diode (OLED) display driver driving chips (DDI) and automotive power semiconductors. In particular, the DDI field installed in TVs and smartphones is Samsung(66,500 -2.06%)It ranks second in global market share after An industry official said, “We are expanding our target for the system semiconductor market, which is expected to grow rapidly. LX Semicon“I understand that LX Group is considering this acquisition to create synergy with the company.”

Unfulfilled ‘LG semiconductor’s dream’

Chairman Koo’s will for the semiconductor business is known to be extraordinary. In fact, he is located in Yangjae-dong, Seoul. LX Semicon He has a strong attachment to the semiconductor business to the extent that he has a separate office in the office building and goes to work every week. To him, the semiconductor business is considered ‘one of the best things to do’. He served as the CEO of LG Semiconductor from 1997 to 1998 before becoming independent from the LG Group, but due to the foreign exchange crisis at that time, Hyundai Electronics (now SK hynix) by handing over the semiconductor.

At that time, the Kim Dae-jung government promoted a ‘big deal’ for the five major groups. In the semiconductor industry, the integration of Hyundai Electronics, the world’s fourth largest and LG Semiconductor, the sixth largest, was discussed in earnest. Both groups objected, but consulting firm Arthur D Little came up with the result that “Hyundai Electronics is suitable as an integrated entity.” Koo and his father, Koo Cha-kyung, were fiercely opposed, but they were unable to withstand the pressure of the government and wept and eaten mustard, so LG closed the semiconductor business. It is said that Chairman Koo was deeply heartbroken because he handed over the company to his will, not voluntarily.

If LX Group finally acquires MagnaChip, the company will return to the former chairman’s possession after 20 years. MagnaChip was founded in 2004 by Hynix Semiconductor (currently SK hynix) is a company that was spun off while cleaning up the non-memory division to focus on memory semiconductors, so if you go back, it is because it was a member of the LG Semiconductor family.

The front page of January 7, 1999, Hankyung, which reported on LG and Hyundai's semiconductor big deal.  Hankyung DB

The front page of January 7, 1999, Hankyung, which reported on LG and Hyundai’s semiconductor big deal. Hankyung DB

While launching the LX Group, Chairman Koo had in mind the expansion of the semiconductor business. When it separated from LG last year, it was the only semiconductor affiliate of the LG group. LX Semiconby incorporation into the group LX HoldingsAmong affiliates except for LX SemiconHe was the only one with the title of executive (unregistered).

An official from the Presidential Takeover Committee said, “It is very welcome for a global electronic company like LG to jump into semiconductors, even for the sake of the national economy. said

An industry official said, “I know that Chairman Koo’s will to acquire MagnaChip is great.” “If LX Group embraces MagnaChip, LX SemiconThere is a prospect that it will complete the semiconductor lineup that has gone one step further and develop it into a stable system that is not shaken by drafts,” he said.

Another industry official said, “The Pan-LG Group lacks rental and marketing capabilities, but no one recognizes its technological prowess. As the snow keeps coming out LG ElectronicsIf LX Group’s vehicle semiconductors and LX Group’s system semiconductors have the capability, great synergy will occur in the domestic economy together with Samsung and SK,” he said.

Reporter Kang Kyung-joo, Hankyung.com qurasoha@hankyung.com

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