CEO interview: MagnaChip’s Youm Huh

MagnaChip was the former non-memory chip unit of South Korean memory maker Hynix Semiconductor Inc. In October of 2004, the non-memory chip unit of Hynix was sold to a newly-created South Korean company formed by Citigroup Venture Capital (CVC) Equity Partners L.P., CVC Asia Pacific Ltd. and Francisco Partners.

MagnaChip (Seoul, South Korea) is currently developing its own identity, expanding its standard product lines and foundry offerings and mulling an initial public offering (IPO) in the United States. At the company’s headquarters, EE Times recently sat down and talked to Youm Huh, president and CEO of the chip maker.

EE Times: Has MagnaChip completely severed its ties with Hynix?

Huh: We used to be part of a business division within a big company in Hynix. Prior to that, we were part of a Korean conglomerate within LG and Hyundai.

In the beginning of our formation, we used Hynix’ infrastructure. To become independent, we have worked on a lot of issues, particularly on our accounting systems, IT systems and planning.

Now, we’ve built our own identity. There are also a lot cultural changes. We have a good combination of West and East. The model that we are now pursuing is to become a global company incorporated in Korea.

EE Times: MagnaChip was launched a little over a year ago. Is the company on track or behind plan right now?

Huh: We are on track. In some areas, we’ve exceeded our plan. In some areas, we’re behind. We are working on it.

We need to improve certain areas of our R&D capabilities, such as manufacturing and process technology. Basically, in Korea, we have a handicap in design capabilities. So right after the spin off, we acquired two fabless companies: IC Media in the U.S. and also Isron in Japan. (IC Media makes CMOS image sensors, while Isron is a supplier of TFT driver chips).

EE Times: What is current and future outlook for MagnaChip?

Huh: We are consumer driven. So the unit numbers are growing, but the ASPs are decreasing. So revenue-wise, we are sort of flat.

EE Times: And what about the fourth quarter?

Huh: We have to see. We are very cautious once we get into the fourth quarter.

EE Times: MagnaChip seems to derive most of its sales in Korea. Are you expanding your reach?

Huh: As we roll out a new set of products, we expect further growth. Short term, we have more growth in Korea, because we have a very solid customer base. We are also expanding outside of Korea. For example, in Japan, Sharp is a big customer. In Taiwan, we are also expanding.

EE Times: How do you see the overall semiconductor business evolving?

Huh: In the past, semiconductor cycles were very long. A lot of upturns and downturns. Now, the cycles are getting shorter. That means in the supply chain, companies must have better visibility. So they must be more responsive.

EE Times:What are MagnaChip’s fastest-growing IC product lines?

Huh: Last year, it was the CMOS image sensor market. This year, our fastest-growing market is TFT LCD driver chips, particularly for large-screen displays in TVs. LCD monitor applications are growing.

We have a strong position in TV applications, because we have a multi-channel driver chip. The driver can support many channels — more than 600. We are the only company offering more than 600 channels.

EE Times: MagnaChip has a strong position in CMOS image sensors. What kind of products are you developing?

Huh: We are shipping 1.3-megapixel VGA products. We are also offering a 3.2-mexapixal sensor. Two-megapixel is coming soon. This year, VGA is the highest volume product.

EE Times: Who are your competitors in this market?

Huh: The primary players are OmniVision, Micron and MagnaChip. Samsung LSI is coming on. Then, there are a couple of Japanese players: Toshiba and Sony. They are doing some work, but they focusing on CCDs. There are other fabless companies coming on. Because of the nature of the product, the fabless companies have a handicap.

EE Times: Can you describe your foundry strategy and customer base in the arena?

Huh: We have a specialty foundry business. We offer specialty process technologies: high-voltage, power, mixed-signal, analog, and also nonvolatile embedded memory.

We have a different model. TSMC, UMC, Chartered and even SMIC are pushing the technology nodes. It’s a very capex-driven business.

In the U.S., our customers are ADI, Cirrus, Microsemi, Conexant and Kopin. In Taiwan, our customers are Sunplus, Via and Solomon. Wolfson is our customer as well.