Magnachip to exit display business – shifts focus to power semiconductors
Magnachip Semiconductor says that it will shut down its Display business by the end of the second quarter of 2025, transitioning into a pure-play power semiconductor company focused on Power IC and Power discrete solutions.
The decision, which was unanimously approved by the company’s Board of Directors, follows a strategic review and unsuccessful efforts to divest the Display business. Magnachip states in a press release that it has begun notifying affected customers and will classify the Display segment as discontinued operations in its upcoming Q1 2025 earnings report.
“It was an extremely difficult decision to shut down our Display business when considering both our valued customers and employees,” says Magnachip CEO YJ Kim. “However, our first priority is to ensure Magnachip’s long-term success by achieving consistent profitability and earnings growth in order to maximize shareholder value. Navigating the unpredictable macroeconomic headwinds will likely pose significant challenges to all companies over the coming few quarters.”
The company also confirmed it will liquidate Magnachip Mixed-Signal, Ltd. (MMS), its wholly owned subsidiary managing the Display unit. Meanwhile, Magnachip's Power IC operations — previously part of MMS — will continue under Magnachip Semiconductor, Ltd. (Magnachip Korea), alongside its Power discrete business.
As part of the wind-down, Magnachip plans to maintain a small team to manage end-of-life (EOL) support for existing Display customers and may explore monetisation opportunities for remaining Display assets.
Shift to power semiconductors and 3-3-3 growth strategy
In 2024, Magnachip's Power discrete and Power IC businesses generated USD 185 million in revenue, up 13% from 2023. Looking ahead, the company projects mid- to high-single-digit revenue growth in 2025.
The pivot to focus exclusively on Power discrete and Power IC businesses is designed to position Magnachip for a return to profitability. The company aims to reach quarterly adjusted EBITDA break-even from continuing operations by the end of 2025, with a goal of achieving positive adjusted operating income by 2026 and positive adjusted free cash flow by 2027.
YJ Kim says that each of these targets will act as milestones towards achieving a goal in 3 years to reach a USD 300 million annual revenue run-rate with a 30% gross profit margin target. This is the company's "3-3-3" strategy.
The company has not yet provided a financial estimate for shutdown-related charges but says that it will do so once available.