SFA Semiconductor sells its Chinese subsidiary! Rumor has it that Foxconn will take over

Source: CINNO
    At the beginning of this month, SFA Semiconductor signed a sales contract with a local Chinese company as a Chinese entity. The company said that it did not disclose the specific information of the purchase enterprise because the sale process was in progress, but it was said to be Foxconn series companies in Chinese Mainland. If approved by the government, it is expected that the transaction will be completed in the first half of this year.
    The reason why SFA Semiconductor sells Chinese legal entities is because it is difficult to ensure business competitiveness compared to local enterprises. Chinese semiconductor companies rely on active support from local governments to continuously strengthen their technological and cost competitiveness. At a time when the United States is promoting comprehensive sanctions with the aim of restraining the development of China‘s high-tech industry, the Chinese government will establish a 300 billion yuan fund for semiconductor localization to invest in the semiconductor industry.
    According to analysis, SFA Semiconductor has determined that the possibility of stable profitability in China is very low, so it has decided to sell the Chinese legal entity. In fact, the performance of SFA Semiconductor‘s Chinese legal entity is also showing a downward trend. In 2021, the sales revenue was 38.6 billion Korean won (approximately 208 million RMB), and the operating profit was 1.6 billion Korean won (approximately 8.62 million RMB). However, in 2022, the sales revenue was 34.3 billion Korean won (approximately 185 million RMB), a decrease of 11.1%, resulting in a loss of 900 million Korean won (approximately 4.86 million RMB), which turned from profit to loss. Last year, the operating loss was 4.2 billion Korean won (approximately 22.68 million RMB), and the extent of the loss continued to expand.
    After selling to Chinese legal entities, SFA Semiconductor will focus its business operations on core Korean and Philippine legal entities. South Korea aims to strengthen its high value-added artificial intelligence (AI) semiconductor products, ensure wafer bumping, packaging, and testing related businesses, and drive sales expansion. For this reason, the addition of bumping is currently underway. Last year, the benchmark production capacity was 26000 wafers per month according to wafer standards, an increase of nearly 10% compared to the previous year (24000 wafers). The labor costs of Filipino legal entities are relatively low, ensuring cost competitiveness. Therefore, profitability will be improved through effective resource operation. To meet the DDR5 demand for high value-added DRAM, mass production equipment will be constructed first. SFA semiconductor professionals said, "The company will focus on cultivating core businesses that can expand competitiveness and ensure a foundation for further growth."