Magnachip, spun off from South Korea’s SK hynix and listed on the US stock market, has been sold to a Chinese private equity fund, according to industry sources Monday.

The chipmaker will be acquired by China’s Wise Road Capital for 1.6 trillion won ($1.4 billion) according to the company announcement.

All of the shares will be sold to the Chinese fund at $29 per share with a 75 percent premium, which is estimated to be $1.4 billion.

“The latest deal will not only bring the best profits to shareholders, customers and employees, but also serve as a great opportunity to accelerate the company’s third-stage growth,” said Magnachip CEO Kim Young-joon.

The CEO underlined that there will not be any change to the conditions of employees working in Korea after the sale.

“After the sale, the company’s head office in Seoul, R&D center in Cheongju and production facility in Gumi, will operate as usual not influenced by the deal,” a company official said.

The sale process is expected to be completed in the second half of this year.

Magnachip was spun off from SK hynix in 2004 and sold to Avenue Capital as SK decided to concentrate on the memory business.

But in 2020, SK hynix subsidiary System IC took part in a consortium of domestic funds to acquire the Cheongju foundry plant of Magnachip as a limited partner.

Magnachip designs and produces display driver ICs for organic light-emitting diode panels and some automotive chips, including power management ICs. The company raised $570 million in sales and $32.6 million in operating profit last year.

Some have raised concerns that since Magnachip originated from Korea, there are risks of technology leakage to China, as it makes national-level efforts to boost the semiconductor industry there.

However, unlike industry leaders such as Samsung Electronics, Magnachip largely designs chips on 8-inch (200 millimeters) equipment, which is considered outdated.

“It is difficult to say there is no need to be concerned, but Magnachip’s technology is quite old,” said one industry official.

The company had once struggled, as demand for 8-inch wafer-based chips lagged for years since 2010.

But as the global foundry market has received a major boost in the wake of the COVID-19 pandemic, demand for 8-inch chip products has rebounded.

“As the foundry market is growing, it is reasonable that the Chinese fund would be interested in Magnachip’s chip technology,” the official said.

"The latest deal includes only the fabless unit of Magnachip," a company spokesperson said.