ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol |
Name of each exchange on which registered | ||
Large Accelerated Filer |
☐ | ☒ | ||||
Non-Accelerated Filer |
☐ | Smaller Reporting Company | ||||
Emerging growth company |
Page |
||||||||
Item 1. | 2 | |||||||
Item 1A. | 19 | |||||||
Item 1B. | 38 | |||||||
Item 1C. | 38 | |||||||
Item 2. | 40 | |||||||
Item 3. | 40 | |||||||
Item 4. | 40 | |||||||
Item 5. | 41 | |||||||
Item 6. | 43 | |||||||
Item 7. | 43 | |||||||
Item 7A. | 61 | |||||||
Item 8. | 63 | |||||||
Item 9. | 103 | |||||||
Item 9A. | 103 | |||||||
Item 9B. | 104 | |||||||
Item 9C. | 104 | |||||||
Item 10. | 105 | |||||||
Item 11. | 105 | |||||||
Item 12. | 105 | |||||||
Item 13. | 105 | |||||||
Item 14. | 105 | |||||||
Item 15. | 106 | |||||||
Item 16. | 110 | |||||||
111 |
• | Broad Offering of Differentiated Products with Advanced System-Level Features and Functions. |
• | Fast Time-to-Market |
• | Ability to Deliver Cost Competitive Solutions. |
• | Focus on Delivering Highly Energy-Efficient Products. run-time, environmentally friendly and energy-efficient consumer electronic products. In addition, there is an increasing regulatory focus on reducing energy consumption of consumer electronic products. As a result of a global focus on more environmentally friendly products, our customers are seeking analog and mixed-signal semiconductor suppliers that have the technological expertise to deliver solutions that satisfy these ever increasing regulatory and consumer power efficiency demands. |
• | Advanced Analog and Mixed-Signal Semiconductor Technology. |
• | Established Relationships and Close Collaboration with Leading Global Electronics Companies. |
• | Longstanding Presence in Asia and Proximity to Global Electronics Devices Supply Chain. |
• | Broad Portfolio of Product Offerings Targeting Large, High-Growth Markets. |
• | Highly Efficient Manufacturing Capabilities. low-cost operating structure and improve our operational efficiency. We believe the location of our primary manufacturing and research and development facilities in Asia and the relatively low need for ongoing capital expenditures provide us with a number of cost advantages. Since 2007, we design and manufacture OLED display driver ICs in our internal manufacturing facilities. As we expanded our design capabilities to products that require lower geometries unavailable at our existing manufacturing facilities, we began outsourcing manufacturing of certain OLED display driver ICs to external 12-inch foundries starting in the second half of 2015 and we started outsourcing 8-inch wafer |
for OLED TV ICs after the sale of our fabrication facility located in Cheongju, Korea in 2020. This additional source of manufacturing is an increasingly important part of our supply chain management. By outsourcing manufacturing of OLED products to external foundries, we are able to adapt dynamically to changing customer requirements and address growing markets without substantial capital investments by us. |
• | Increase Business with Existing Customers. design-win rates. We seek to increase our customer penetration by more closely aligning our product roadmap with those of our key customers and take advantage of our broad product portfolio, our deep knowledge of customer needs and existing relationships to sell more existing and new products. |
• | Broaden Our Customer Base. |
• | Drive Execution Excellence. |
• | Return on Capital Investments and Cash Flow Generation. in-house manufacturing facility and external foundry to address a broad portfolio of power products while we seek to maximize return on capital investments and our cash flow generation. We intend to keep our capital expenditures relatively low by maintaining our focus on specialty process technologies that do not require substantial investment in frequent upgrades to the latest manufacturing equipment. However, from time to time, we make special investments to enhance our manufacturing capabilities by investing in new equipment and expanding our facility, which we expect will have a positive impact on our future new product development and revenue, particularly during the period of global shortage of capacity. |
• | Resolution and Number of Channels. |
• | Color Depth. TFT-LCD panels, 262 thousand colors are supported by 6-bit source drivers; 16 million colors are supported by 8-bit source drivers; and 1 billion colors are supported by 10-bit source drivers. |
• | Operational Voltage. |
• | Gamma Curve. |
• | Driver Interface. mini-low voltage differential signaling (m-LVDS), unified standard interface (USI) and mobile industry processor interface (“MIPI”). |
• | Package Type. |
• | Large Display Solutions. |
Product |
Key Features |
Applications | ||
TFT-LCD Source Drivers |
• 480 to 1,542 output channels • 6-bit (262 thousand colors), 8-bit (16 million colors), 10-bit (1 billion colors)• Output voltage ranging from 9V to 18V • Low power consumption and low EMI • COF package types • EPI, m-LVDS, USI interface technologies |
• LCD/LED TVs • Notebooks • LCD/LED monitors • Automotive | ||
TFT-LCD Gate Drivers |
• 272 to 960 output channels • Output voltage ranging from 30V to 45V • COF and COG package types |
• Tablet PCs • LCD/LED TVs • Notebooks • Automotive | ||
Timing Controllers |
• Wide range of resolutions • EPI, m-LVDS, MIPI, USI-T interface technologies• Input voltage ranging from 1.6V to 3.6V |
• Tablet PCs • Public information display | ||
OLED Source Drivers |
• 960 output channels • 10 bit (1 billion colors) • Output voltage: 18V • COF package type • EPI interface technology |
• OLED TVs | ||
Micro LED Drivers |
• 480 to 552 output channels (3 Mux) • 10 bit (1 billion colors) • Output voltage: max 18V • COF package type • USI interface technology |
• Micro LED TVs |
Product |
Key Features |
Applications | ||
OLED |
• Resolutions of HD720, WXGA, FHD, FHD+, QHD and QHD+ • Aspect ratio from 16:9 to 21:9 • Color depth of 1 billion • MIPI, eRVDS interface • Logic-based OTP • Image enhancement IP • Display data compression IP |
• Smartphones • Game consoles • Digital still cameras • Tablet PCs • Virtual reality headsets • Automotive | ||
LTPS |
• Resolutions of VGA, WSVGA, WVGA and DVGA • Color depth of 16 million • MDDI, MIPI interface • Logic-based OTP • Separated gamma control |
• Smartphones • Digital still cameras | ||
a-Si TFT |
• Resolutions of WQVGA and HVGA • Color depth of 16 million • RSDS, MDDI, MIPI interface • CABC • Separated gamma control |
• Mobile phones • Digital still cameras • Automotive |
• | MOSFETs. low-voltage from 12V to 30V, medium-voltage from 40V to 200V, high-voltage planar MOSFETs, 200V through 650V, and super junction MOSFETs, 250V through 900V. |
• | IGBTs. |
• | AC-DC/DC-DC AC-DC/DC-DC set-top boxes and display modules. We expect our AC-DC/DC-DC |
• | LED Drivers. |
• | Regulators. |
• | SSD PMICs. |
• | Logic PMICs. (T-CON) of OLED display panel with multi-channel power block (boost converter, buck converter, Op-Amps and positive/negative LDOs.) |
Product |
Key Features |
Applications | ||
Low Voltage MOSFET |
• Voltage options of 12V-30V • Advanced Trench MOSFET Process • High cell density • Advanced packages to enable reduction of PCB mounting area |
• Smartphones, mobile phones, and wearable devices • Tablet PCs, Notebooks • Desktop PCs, Servers • LCD/LED TVs • Industrial applications • Automotive | ||
Medium Voltage MOSFET |
• Voltage options of 40V-200V • Advanced Trench MOSFET Process • High cell density |
• e-Bikes and Motor controls• Battery Management Systems • Power tools and Servers |
Product |
Key Features |
Applications | ||
• High system efficiency • Advanced packages to enable reduction of PCB mounting area |
• Energy Storage System • Other computing applications (Tablet PCs, Notebooks, Desktops) • Consumer applications (TV) • Industrial applications • Automotive | |||
High Voltage MOSFET |
• Voltage options of 200V-650V • R2FET (rapid recovery) option to shorten reverse diode recovery time • Zener diode option for MOSFET protection for abnormal input • Advanced Planar MOSFET Process • Advanced packages to enable reduction of PCB mounting area |
• Adaptors for tablet PC/mobile phone/smartphone • Power supplies • Lighting (ballast, HID, LED) • Industrial applications • LCD/LEDTVs • Automotive | ||
Super Junction MOSFET |
• Voltage options of 250V-900V • Low R DS(ON) • Epi stack process • Zener diode option for MOSFET protection for abnormal input • Advanced SJ MOSFET process • Advanced packages to enable reduction of PCB mounting area • Low power loss by high speed switching |
• LCD/LED/UHD TVs • Lightings applications (ballast, HID, LED) • Smartphones • Power supplies • Servers and Telecom powers • Industrial applications • EV charging station • On board charger | ||
IGBTs |
• Voltage options of 650V/1200V • Field Stop Trench IGBT • Current options from 15A to 100A |
• Automotive • Solar inverters • Industrial applications • Consumer appliances | ||
AC-DC/DC-DC |
• Wide control range for high power application (>150W) • Advanced BCDMOS process • High Precision Voltage Reference • Very low startup current consumption • Fast load and line regulation • Accurate output voltage • OCP, SCP and thermal protections |
• LCD/LED/UHD TVs • Power supplies • Smartphones • Mobile phones • Notebooks • Set-top boxes |
Product |
Key Features |
Applications | ||
LED Backlighting Drivers |
• High efficiency, wide input voltage range • Advanced BCDMOS process • OCP, SCP, OVP and UVLO protections • Accurate LED current control and multi-channel matching • Programmable current limit, boost up frequency |
• Tablet PCs • Notebooks • Smartphones • LED/UHD TVs • LED monitors | ||
Digital Controlled LED Driver |
• Multi-channel constant current control • 12Bit gray scale with SPI |
• Digital signage | ||
LED Lighting Drivers |
• High efficiency, wide input voltage range • Simple solutions with external components fully integrated • Advanced high voltage BCDMOS process • Accurate LED current control and high power factor and low THB |
• AC and DC LED lighting | ||
Regulators |
• Single and multi-regulators • Low Noise Output regulators • Wide range of input voltage and various output current • CMOS and BCDMOS processes • LDO (Low Drop Out — Linear Regulator) |
• Smartphones and Mobile phones • Notebooks • Computing applications | ||
SSD PMIC |
• High current buck • PFM function • High frequency switching • High efficiency • High integration technology • Small QFN package |
• Computing applications | ||
Logic PMIC |
• High current boost • Integrated pass transistor • LDO • 3channel high current buck • Negative Charge Pump • 2channel buffer Op-Amp. • Tiny Wafer Level CSP |
• Notebooks • Tablet PCs |
Name |
Age |
Position | ||||
Young-Joon (YJ) Kim |
59 | Director and Chief Executive Officer | ||||
Shin Young Park |
43 | Chief Financial Officer | ||||
Theodore Kim |
54 | Chief Compliance Officer, General Counsel and Secretary | ||||
Woung Moo Lee |
61 | General Manager of Mixed-Signal Solutions | ||||
Chan Ho Park |
60 | Co-General Manager of Power Analog Solutions |
• | We manufacture our products based on our estimates of customer demand, and if our estimates are incorrect, our financial results could be negatively impacted. |
• | A significant portion of our sales comes from a relatively limited number of customers, the loss of which could adversely affect our financial results. |
• | The average selling prices of our semiconductor products have at times declined rapidly and will likely do so in the future, which could harm our revenue and gross profit. |
• | We are subject to risks associated with currency fluctuations, and changes in the exchange rates of applicable currencies could impact our results of operations. |
• | Global shortages in manufacturing capacities could interrupt or negatively affect our operations, increase cost to manufacture and negatively impact our results of operations. |
• | Expanded trade restrictions may limit our ability to sell to certain customers. |
• | Recent changes in international trade policy and the imposition and threats of international tariffs, including tariffs applied to goods traded between the United States and China, could materially and adversely affect our business and results of operations. |
• | Our Korean subsidiary has been designated as a regulated business under Korean environmental law, and such designation could have an adverse effect on our financial position and results of operations. |
• | Our compliance with the Serious Accidents Punishment Act (the “SAPA”) could require significant expenditures and management time and expose us to liability for violations. |
• | Our business depends on international customers, suppliers and operations in Asia, and as a result we are subject to regulatory, operational, financial and political risks, which could adversely affect our financial results. |
• | We cannot guarantee that our share repurchase program will be successfully consummated, or that it will enhance shareholder value, and share repurchases could affect the price of our common stock. |
• | Provisions in our charter documents and Delaware Law may make it difficult for a third party to acquire us and could depress the price of our common stock. |
• | We have not historically paid dividends and do not currently have any dividend or distribution policy, and therefore, investors may need to rely on sales of their common stock as the only way to realize any future gains on their investments. |
• | our ability to offer cost-effective and high quality products and services on a timely basis using our technologies; |
• | our ability to accurately identify and respond to emerging technological trends and demand for product features and performance characteristics; |
• | our ability to continue to rapidly introduce new products that are accepted by the market; |
• | our ability to adopt or adapt to emerging industry standards; |
• | the number and nature of our competitors and competitiveness of their products and services in a given market; |
• | entrance of new competitors into our markets; |
• | our ability to enter the highly competitive power management market; and |
• | our ability to supply power products to our customers reliably through our own fabrication facility. |
• | pay substantial damages or indemnify customers or licensees for damages they may suffer if the products they purchase from us or the technology they license from us violate the intellectual property rights of others; |
• | stop our manufacture, use, sale or importation of the accused products; |
• | redesign, reengineer or rebrand our products, if feasible; |
• | expend significant resources to develop or acquire non-infringing technologies; |
• | discontinue processes; or |
• | obtain licenses to a third party’s intellectual property. |
• | their earnings; |
• | covenants contained in agreements to which we or our subsidiaries are or may become subject; |
• | business and tax considerations; and |
• | applicable law, including any restrictions under Korean law that may be imposed on our Korean subsidiary that would restrict its ability to make payments on intercompany loans from our Dutch subsidiary. |
• | actual or anticipated variations in our results of operations from quarter to quarter or year to year; |
• | announcements by us or our competitors of significant agreements, technological innovations or strategic alliances; |
• | changes in recommendations or estimates by any securities analysts who follow our securities; |
• | addition or loss of significant customers; |
• | recruitment or departure of key personnel; |
• | changes in economic performance or market valuations of competing companies in our industry; |
• | price and volume fluctuations in the overall stock market; |
• | market conditions in our industry, end markets and the economy as a whole; |
• | subsequent sales of stock and other financings; and |
• | litigation, legislation, regulation or technological developments that adversely affect our business. |
• | authorize our Board of Directors to issue, without stockholder approval, preferred stock with such terms as the Board of Directors may determine; |
• | prohibit action by written consent of our stockholders; |
• | prohibit any person other than our Board of Directors, the chairman of our Board of Directors, our Chief Executive Officer or holders of at least 25% of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors to call a special meeting of our stockholders; and |
• | specify advance notice requirements for stockholder proposals and director nominations. |
• | the transaction is approved by the board of directors before the date the interested stockholder attained that status; |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or |
• | on or after such date, the business combination is approved by the board of directors and authorized at a meeting of stockholders, and not by written consent, by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
• | any merger or consolidation involving the corporation and the interested stockholder; |
• | any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
• | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
• | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
• | Compliance with industry standards and regulatory frameworks |
• | Ongoing Evaluation and Assessment of Systems and Procedure |
• | Cross-Collaboration and Coordination |
• | Third-Party Service Providers |
• | Cyber Incident Response Plan |
• | Security Awareness Training for Personnel |
• | Review of Third-Party Risks |
* | The stock performance included in this graph is not necessarily indicative of future stock performance. |
Company/Index |
Base Period 12/31/2018 |
12/31/2019 | 12/31/2020 | 12/31/2021 | 12/30/2022 | 12/29/2023 | ||||||||||||||||||
Magnachip Semiconductor Corporation |
100 | 186.96 | 217.71 | 337.68 | 151.21 | 120.77 | ||||||||||||||||||
S&P 500 Index |
100 | 129.96 | 149.83 | 190.13 | 153.16 | 190.27 | ||||||||||||||||||
Philadelphia Semiconductor Index |
100 | 160.12 | 242.00 | 341.61 | 219.20 | 361.46 |
Period |
Total Number of Shares Purchased(1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) |
Approximate dollar value of Shares that may yet be Purchased under the Plans or Programs (in thousands)(2) |
||||||||||||
October 2023 |
904,977 | $ | 7.78 | 904,977 | $ | 37,594 | ||||||||||
November 2023 |
153,699 | $ | 7.53 | 153,699 | $ | 36,437 | ||||||||||
December 2023(1) |
72,595 | $ | 7.50 | — | $ | 36,437 | ||||||||||
Total |
1,131,271 | $ | 7.73 | 1,058,676 | $ | 36,437 | ||||||||||
(1) | Includes 72,595 shares withheld to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued under our equity incentive plans. |
(2) | On July 19, 2023, the Company’s Board of Directors authorized a new $50 million stock buyback program. Purchases have been and will be made in the open market or through privately negotiated transactions, depending upon market conditions and other factors. In connection with the repurchase program, the Company established a stock trading plan with Needham & Company, LLC in accordance with Rule 10b5-1 under the Exchange Act. |
• | we believe that Adjusted EBITDA, by eliminating the impact of a number of items that we do not consider to be indicative of our core ongoing operating performance, provides a more comparable measure of our operating performance from period-to-period |
• | we believe that Adjusted EBITDA is commonly requested and used by securities analysts, investors and other interested parties in the evaluation of a company as an enterprise level performance measure that |
eliminates the effects of financing, income taxes and the accounting effects of capital spending, as well as other one time or recurring items described above; and |
• | we believe that Adjusted EBITDA is useful for investors, among other reasons, to assess a company’s period-to-period |
• | for planning purposes, including the preparation of our annual operating budget; |
• | to evaluate the effectiveness of our enterprise level business strategies; |
• | in communications with our Board of Directors concerning our consolidated financial performance; and |
• | in certain of our compensation plans as a performance measure for determining incentive compensation payments. |
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||
(Dollars in millions) |
||||||||
Net loss |
$ | (36.6 | ) | $ | (8.0 | ) | ||
Interest income |
(10.4 | ) | (6.0 | ) | ||||
Interest expense |
0.8 | 1.2 | ||||||
Income tax expense (benefit) |
(10.9 | ) | 5.2 | |||||
Depreciation and amortization |
16.7 | 15.0 | ||||||
EBITDA |
$ | (40.5 | ) | $ | 7.3 | |||
Adjustments: |
||||||||
Equity-based compensation expense(a) |
7.2 | 6.0 | ||||||
Foreign currency loss (gain), net(b) |
(0.5 | ) | 3.0 | |||||
Derivative valuation loss (gain), net(c) |
0.3 | (0.1 | ) | |||||
Early termination and other charges, net(d) |
9.3 | 3.3 | ||||||
Adjusted EBITDA |
$ | (24.2 | ) | $ | 19.5 | |||
(a) | This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-cash equity-based compensation expenses in the future, these expenses do not generally require cash settlement, and, therefore, are not used by us to assess the profitability of our operations. We believe that analysts and investors will find it helpful to review our operating performance without the effects of these non-cash expenses as supplemental information. |
(b) | This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations and foreign currency denominated receivables and payables, as well as the cash impact of foreign currency transaction gains or losses on collection of such receivables and payment of such payables. Although we expect to incur foreign currency translation gains or losses in the future, we believe that analysts and investors will find it helpful to review our operating performance without the effects of these primarily non-cash gains or losses, which we cannot control. Additionally, we believe the isolation of this adjustment provides investors with enhanced comparability to prior and future periods of our operating performance results. |
(c) | This adjustment eliminates the impact of gain or loss recognized in income on derivatives, which represents derivatives value changes excluded from the risk being hedged. We enter into derivative transactions to mitigate foreign exchange risks. As our derivative transactions are limited to a certain portion of our expected cash flows denominated in U.S. dollars, and we do not enter into derivative transactions for trading or speculative purposes, we do not believe that these charges or gains are indicative of our core operating performance. |
(d) | For the year ended December 31, 2023, this adjustment eliminates the termination related charges of $8.4 million in connection with the voluntary resignation program (the “2023 Voluntary Resignation Program”) that we offered and paid to certain employees during the first half of 2023 and $0.8 million of one-time employee incentives. For the year ended December 31, 2022, this adjustment eliminates $2.8 million of one-time employee incentives and professional service fees and expenses of $1.0 million incurred in connection with certain strategic evaluations, which was offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. As these adjustments meaningfully impacted our operating results and are not expected to represent an ongoing operating expense or income to us, we believe our operating performance results are more usefully compared if these adjustments are excluded. |
• | Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
• | Adjusted EBITDA does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees; |
• | Adjusted EBITDA does not reflect the costs of holding certain assets and liabilities in foreign currencies; and |
• | other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||
(Dollars in millions) |
||||||||
Operating loss |
$ | (57.6 | ) | $ | (5.2 | ) | ||
Adjustments: |
||||||||
Equity-based compensation expense(a) |
7.2 | 6.0 | ||||||
Early termination and other charges, net(b) |
9.3 | 3.3 | ||||||
Adjusted Operating Income (Loss) |
$ | (41.2 | ) | $ | 4.1 | |||
(a) | This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-cash equity-based compensation expenses in the future, these expenses do not generally require cash settlement, and, therefore, are not used by us to assess the profitability of our operations. We believe that analysts and investors will find it helpful to review our operating performance without the effects of these non-cash expenses as supplemental information. |
(b) | For the year ended December 31, 2023, this adjustment eliminates the termination related charges of $8.4 million in connection with the 2023 Voluntary Resignation Program that we offered and paid to certain employees during the first half of 2023 and $0.8 million of one-time employee incentives. For the year ended December 31, 2022, this adjustment eliminates $2.8 million of one-time employee incentives and professional service fees and expenses of $1.0 million incurred in connection with certain strategic evaluations, which was offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. As these adjustments meaningfully impacted our operating results and are not expected to represent an ongoing operating expense or income to us, we believe our operating performance results are more usefully compared if these adjustments are excluded. |
• | we use Adjusted Net Income (Loss) (including on a per share basis) in communications with our Board of Directors concerning our consolidated financial performance without the impact of non-cash expenses and the other items as we discussed below since we believe that it is a more consistent measure of our core operating results from period to period; and |
• | we believe that reporting Adjusted Net Income (Loss) (including on a per share basis) is useful to readers in evaluating our core operating results because it eliminates the effects of non-cash expenses as well as the other items we discuss below, such as foreign currency gains and losses, which are out of our control and can vary significantly from period to period. |
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||
(Dollars in millions, except per share data) |
||||||||
Net loss |
$ | (36.6 | ) | $ | (8.0 | ) | ||
Adjustments: |
||||||||
Equity-based compensation expense(a) |
7.2 | 6.0 | ||||||
Foreign currency loss (gain), net(b) |
(0.5 | ) | 3.0 | |||||
Derivative valuation loss (gain), net(c) |
0.3 | (0.1 | ) | |||||
Early termination and other charges, net(d) |
9.3 | 3.3 | ||||||
Income tax effect on non-GAAP adjustments(e) |
(2.2 | ) | 4.6 | |||||
Adjusted Net Income (Loss) |
$ | (22.5 | ) | $ | 8.8 | |||
Reported loss per share—basic |
$ | (0.89 | ) | $ | (0.18 | ) | ||
Reported loss per share—diluted |
$ | (0.89 | ) | $ | (0.18 | ) | ||
Weighted average number of shares—basic |
41,013,069 | 44,850,791 | ||||||
Weighted average number of shares—diluted |
41,013,069 | 44,850,791 | ||||||
Adjusted earnings (loss) per share—basic |
$ | (0.55 | ) | $ | 0.20 | |||
Adjusted earnings (loss) per share—diluted |
$ | (0.55 | ) | $ | 0.19 | |||
Weighted average number of shares—basic |
41,013,069 | 44,850,791 | ||||||
Weighted average number of shares—diluted |
41,013,069 | 45,795,559 |
(a) | This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-cash equity-based compensation expenses in the future, these expenses do not generally require cash settlement, and, therefore, are not used by us to assess the profitability of our operations. We believe that analysts and investors will find it helpful to review our operating performance without the effects of these non-cash expenses as supplemental information. |
(b) | This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations and foreign currency denominated receivables and payables, as well as the cash impact of foreign currency transaction gains or losses on collection of such receivables and payment of such payables. Although we expect to incur foreign currency translation gains or losses in the future, we believe that analysts and investors will find it helpful to review our operating performance without the effects of these primarily non-cash gains or losses, which we cannot control. Additionally, we believe the isolation of this adjustment provides investors with enhanced comparability to prior and future periods of our operating performance results. |
(c) | This adjustment eliminates the impact of gain or loss recognized in income on derivatives, which represents derivatives value changes excluded from the risk being hedged. We enter into derivative transactions to mitigate foreign exchange risks. As our derivative transactions are limited to a certain portion of our expected cash flows denominated in U.S. dollars, and we do not enter into derivative transactions for trading |
or speculative purposes, we do not believe that these charges or gains are indicative of our core operating performance. |
(d) | For the year ended December 31, 2023, this adjustment eliminates the termination related charges of $8.4 million in connection with the 2023 Voluntary Resignation Program that we offered and paid to certain employees during the first half of 2023 and $0.8 million of one-time employee incentives. For the year ended December 31, 2022, this adjustment eliminates $2.8 million of one-time employee incentives and professional service fees and expenses of $1.0 million incurred in connection with certain strategic evaluations, which was offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. As these adjustments meaningfully impacted our operating results and are not expected to represent an ongoing operating expense or income to us, we believe our operating performance results are more usefully compared if these adjustments are excluded. |
(e) | For the years ended December 31, 2023 and 2022, income tax effect on non-GAAP adjustments were calculated by calculating the tax expense (benefit) of each jurisdiction with or without the non-GAAP adjustments. For the year ended December 31, 2023, this adjustment eliminates the income tax effect on non-GAAP adjustments of negative $2.2 million, which mainly related to our Korean subsidiary. For the year ended December 31, 2022, income tax effect on non-GAAP adjustments related to our Korean subsidiary and the U.S. parent entity were $6.2 million and negative $1.7 million, respectively. |
• | Adjusted Net Income (Loss) does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted Net Income (Loss) does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees; |
• | Adjusted Net Income (Loss) does not reflect the costs of holding certain assets and liabilities in foreign currencies; and |
• | other companies in our industry may calculate Adjusted Net Income (Loss) differently than we do, limiting its usefulness as a comparative measure. |
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||||||||||||||
Amount |
% of Total revenues |
Amount |
% of Total revenues |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
Net sales—standard products business |
$ | 195.7 | 85.1 | % | $ | 301.9 | 89.4 | % | $ | (106.2 | ) | |||||||||
Net sales—transitional Fab 3 foundry services |
34.4 | 14.9 | 35.8 | 10.6 | (1.4 | ) | ||||||||||||||
Total revenues |
230.1 | 100.0 | 337.7 | 100.0 | (107.6 | ) | ||||||||||||||
Cost of sales |
||||||||||||||||||||
Cost of sales—standard products business |
143.8 | 62.5 | 202.3 | 59.9 | (58.6 | ) | ||||||||||||||
Cost of sales—transitional Fab 3 foundry services |
34.6 | 15.1 | 34.0 | 10.1 | 0.6 | |||||||||||||||
Total cost of sales |
178.4 | 77.6 | 236.4 | 70.0 | (58.0 | ) | ||||||||||||||
Gross profit |
51.6 | 22.4 | 101.3 | 30.0 | (49.6 | ) | ||||||||||||||
Selling, general and administrative expenses |
48.5 | 21.1 | 50.9 | 15.1 | (2.4 | ) | ||||||||||||||
Research and development expenses |
51.6 | 22.4 | 52.3 | 15.5 | (0.8 | ) | ||||||||||||||
Early termination and other charges, net |
9.3 | 4.0 | 3.3 | 1.0 | 6.0 | |||||||||||||||
Operating loss |
(57.6 | ) | (25.1 | ) | (5.2 | ) | (1.6 | ) | (52.4 | ) | ||||||||||
Interest income |
10.4 | 4.5 | 6.0 | 1.8 | 4.5 | |||||||||||||||
Interest expense |
(0.8 | ) | (0.4 | ) | (1.2 | ) | (0.3 | ) | 0.3 | |||||||||||
Foreign currency gain (loss), net |
0.5 | 0.2 | (3.0 | ) | (0.9 | ) | 3.5 | |||||||||||||
Others, net |
0.0 | 0.0 | 0.6 | 0.2 | (0.5 | ) | ||||||||||||||
10.1 | 4.4 | 2.4 | 0.7 | 7.7 | ||||||||||||||||
Loss before income tax expense (benefit) |
(47.6 | ) | (20.7 | ) | (2.9 | ) | (0.9 | ) | (44.7 | ) | ||||||||||
Income tax expense (benefit) |
(10.9 | ) | (4.8 | ) | 5.2 | 1.5 | (16.1 | ) | ||||||||||||
Net loss |
$ | (36.6 | ) | (15.9 | )% | $ | (8.0 | ) | (2.4 | )% | $ | (28.6 | ) | |||||||
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||||||||||||||
Amount |
% of Total revenues |
Amount |
% of Total revenues |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
Net sales—standard products business |
||||||||||||||||||||
Display Solutions |
32.1 | 14.0 | 71.4 | 21.2 | (39.3 | ) | ||||||||||||||
Power Solutions |
163.6 | 71.1 | 230.5 | 68.3 | (66.9 | ) | ||||||||||||||
Total standard products business |
195.7 | 85.1 | 301.9 | 89.4 | (106.2 | ) | ||||||||||||||
Net sales—transitional Fab 3 foundry services |
34.4 | 14.9 | 35.8 | 10.6 | (1.4 | ) | ||||||||||||||
Total revenues |
$ | 230.1 | 100.0 | % | $ | 337.7 | 100.0 | % | $ | (107.6 | ) | |||||||||
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||||||||||||||
Amount |
% of Net Sales |
Amount |
% of Net Sales |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Gross Profit |
||||||||||||||||||||
Gross profit—standard products business |
51.9 | 26.5 | 99.5 | 33.0 | (47.6 | ) | ||||||||||||||
Gross profit—transitional Fab 3 foundry services |
(0.3 | ) | (0.8 | ) | 1.7 | 4.8 | (2.0 | ) | ||||||||||||
Total gross profit |
$ | 51.6 | 22.4 | % | $ | 101.3 | 30.0 | % | $ | (49.6 | ) | |||||||||
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
|||||||||||||||||||
Amount |
% of Net Sales – standard products business |
Amount |
% of Net Sales – standard products business |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Korea |
$ | 66.8 | 34.1 | % | $ | 105.3 | 34.9 | % | $ | (38.5 | ) | |||||||||
Asia Pacific (other than Korea) |
119.2 | 60.9 | 179.6 | 59.5 | (60.3 | ) | ||||||||||||||
United States |
2.8 | 1.4 | 10.4 | 3.4 | (7.5 | ) | ||||||||||||||
Europe |
6.8 | 3.5 | 6.7 | 2.2 | 0.1 | |||||||||||||||
$ | 195.7 | 100.0 | % | $ | 301.9 | 100.0 | % | $ | (131.2 | ) | ||||||||||
6 4 |
||||
6 7 |
||||
6 8 |
||||
6 9 |
||||
70 |
||||
71 |
||||
7 2 |
/s/ |
March 8 , 2024 |
December 31, |
||||||||
2023 |
2022 |
|||||||
(In thousands of U.S. dollars, except share data) |
||||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
||||||||
Inventories, net |
||||||||
Other receivables |
||||||||
Prepaid expenses |
||||||||
Hedge collateral (Note 9) |
||||||||
Other current assets (Note 1) |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
Property, plant and equipment, net |
||||||||
Operating lease right-of-use |
||||||||
Intangible assets, net |
||||||||
Long-term prepaid expenses |
||||||||
Deferred income taxes (Note 16) |
||||||||
Other non-current assets |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | $ | ||||||
Other accounts payable |
||||||||
Accrued expenses |
||||||||
Accrued income taxes |
||||||||
Operating lease liabilities |
||||||||
Other current liabilities (Note 1) |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
Accrued severance benefits, net |
||||||||
Non-current operating lease liabilities |
||||||||
Other non-current liabilities |
||||||||
|
|
|
|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Commitments and contingencies |
||||||||
Stockholders’ equity |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Treasury stock, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
(In thousands of U.S. dollars, except share data) |
||||||||||||
Revenues: |
||||||||||||
Net sales—standard products business |
$ | $ | $ | |||||||||
Net sales—transitional Fab 3 foundry services |
||||||||||||
|
|
|
|
|
|
|||||||
Total revenues |
||||||||||||
Cost of sales: |
||||||||||||
Cost of sales—standard products business |
||||||||||||
Cost of sales—transitional Fab 3 foundry services |
||||||||||||
|
|
|
|
|
|
|||||||
Total cost of sales |
||||||||||||
|
|
|
|
|
|
|||||||
Gross profit |
||||||||||||
Operating expenses: |
||||||||||||
Selling, general and administrative expenses |
||||||||||||
Research and development expenses |
||||||||||||
Merger-related income, net |
( |
) | ||||||||||
Early termination and other charges, net |
||||||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
||||||||||||
|
|
|
|
|
|
|||||||
Operating income (loss): |
( |
) | ( |
) | ||||||||
Interest income |
||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Foreign currency gain (loss), net |
( |
) | ( |
) | ||||||||
Other income, net |
||||||||||||
|
|
|
|
|
|
|||||||
Income (loss) before income tax expense (benefit) |
( |
) | ( |
) | ||||||||
Income tax expense (benefit) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Earnings (loss) per common share— |
||||||||||||
Basic |
$ | ( |
) | $ | ( |
) | $ | |||||
Diluted |
$ | ( |
) | $ | ( |
) | $ | |||||
Weighted average number of shares— |
||||||||||||
Basic |
||||||||||||
Diluted |
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
(In thousands of U.S. dollars) |
||||||||||||
Net income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Other comprehensive income (loss) |
||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ( |
) | ||||||
Derivative adjustments |
||||||||||||
Fair valuation of derivatives |
( |
) | ( |
) | ( |
) | ||||||
Reclassification adjustment for loss (gain) on derivatives included in net income (loss) |
||||||||||||
|
|
|
|
|
|
|||||||
Total other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Total comprehensive income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
Total |
|||||||||||||||||||||||
(In thousands of U.S. dollars, except share data) |
Shares |
Amount |
||||||||||||||||||||||||||
Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Exchange of exchangeable senior note |
— | — | — | |||||||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||||||
Settlement of restricted stock units |
( |
) | — | — | — | — | ||||||||||||||||||||||
Accelerated stock repurchase |
( |
) | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||||||
Settlement of restricted stock units |
( |
) | — | — | — | ( |
) | |||||||||||||||||||||
Accelerated stock repurchase |
( |
) | — | — | ( |
) | — | — | ||||||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||||||
Settlement of restricted stock units |
( |
) | — | — | — | ( |
) | |||||||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
(In thousands of U.S. dollars) |
||||||||||||
Cash flows from operating activities |
||||||||||||
Net income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |
||||||||||||
Depreciation and amortization |
||||||||||||
Provision for severance benefits |
||||||||||||
Amortization of debt issuance costs and original issue discount |
— | — | ||||||||||
Loss on foreign currency, net |
||||||||||||
Provision for inventory reserves |
||||||||||||
Stock-based compensation |
||||||||||||
Deferred income taxes |
( |
) | ||||||||||
Other, net |
( |
) | ||||||||||
Changes in operating assets and liabilities |
||||||||||||
Accounts receivable, net |
||||||||||||
Inventories |
( |
) | ( |
) | ||||||||
Other receivables |
( |
) | ||||||||||
Prepaid expenses |
||||||||||||
Other current assets |
( |
) | ||||||||||
Accounts payable |
( |
) | ( |
) | ||||||||
Other accounts payable |
( |
) | ( |
) | ( |
) | ||||||
Accrued expenses |
( |
) | ||||||||||
Accrued income taxes |
( |
) | ( |
) | ( |
) | ||||||
Deferred revenue |
( |
) | ( |
) | ||||||||
Other current liabilities |
( |
) | ( |
) | ||||||||
Other non-current liabilities |
( |
) | ( |
) | ||||||||
Contributions to severance insurance deposit accounts |
( |
) | ( |
) | ( |
) | ||||||
Payment of severance benefits |
( |
) | ( |
) | ( |
) | ||||||
Other, net |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by (used in) operating activities |
( |
) | ||||||||||
Cash flows from investing activities |
||||||||||||
Proceeds from settlement of hedge collateral |
||||||||||||
Payment of hedge collateral |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from disposal of property, plant and equipment |
||||||||||||
Purchase of property, plant and equipment |
( |
) | ( |
) | ( |
) | ||||||
Payment for intellectual property registration |
( |
) | ( |
) | ( |
) | ||||||
Collection of guarantee deposits |
||||||||||||
Payment of guarantee deposits |
( |
) | ( |
) | ( |
) | ||||||
Other, net |
— | — | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net cash used in investing activities |
( |
) | ( |
) | ( |
) | ||||||
Cash flows from financing activities |
||||||||||||
Proceeds from exercise of stock options |
||||||||||||
Acquisition of treasury stock |
( |
) | ( |
) | ( |
) | ||||||
Acquisition of stock under accelerated stock repurchase agreement |
— | — | ( |
) | ||||||||
Payment under accelerated stock repurchase agreement |
— | — | ( |
) | ||||||||
Repayment of financing related to water treatment facility arrangement |
( |
) | ( |
) | ( |
) | ||||||
Others |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash used in financing activities |
( |
) | ( |
) | ( |
) | ||||||
Effect of exchange rates on cash and cash equivalents |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net decrease in cash and cash equivalents |
( |
) | ( |
) | ( |
) | ||||||
Cash and cash equivalents at beginning of period |
||||||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents at end of period |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Supplemental cash flow information |
||||||||||||
Cash paid for interest |
$ | — | $ | — | $ | |||||||
Cash paid for income taxes, net |
$ | $ | $ | |||||||||
Non-cash investing and financing activities |
||||||||||||
Property, plant and equipment additions in other accounts payable |
$ | $ | $ | |||||||||
Acquisition of treasury stock to satisfy the tax withholding obligations in connection with equity-based compensation |
$ | $ | $ | |||||||||
Unsettled common stock repurchases |
$ | — | $ | $ | — | |||||||
Exchange of exchangeable senior notes into common stock |
$ | — | $ | — | $ |
Buildings |
||||
Building related structures |
||||
Machinery and equipment |
||||
Others |
Carrying Value December 31, 2023 |
Fair Value Measurement December 31, 2023 |
Quoted Prices in Active Markets for Identical Liability (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||||||
Assets: |
||||||||||||||||||||
(other current assets) |
$ | $ | — | $ | — | |||||||||||||||
Liabilities: |
||||||||||||||||||||
(other current liabilities) |
$ | $ | — | $ | — |
Carrying Value December 31, 2022 |
Fair Value Measurement December 31, 2022 |
Quoted Prices in Active Markets for Identical Liability (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||||||
Liabilities: |
||||||||||||||||||||
(other current liabilities) |
$ | $ | — | $ | — |
December 31, |
||||||||
2023 |
2022 |
|||||||
Accounts receivable |
$ | $ | ||||||
Notes receivable |
||||||||
Less: |
||||||||
Allowance for credit losses |
( |
) | ( |
) | ||||
Sales return reserves |
( |
) | ( |
) | ||||
Accounts receivable, net |
$ | $ | ||||||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Provision |
— | — | ( |
) | ||||||||
Write off |
— | — | ||||||||||
Translation adjustments |
||||||||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Reversal (provision) |
( |
) | ( |
) | ( |
) | ||||||
Usage |
— | — | — | |||||||||
Translation adjustments |
( |
) | ||||||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) |
December 31, |
||||||||
2023 |
2022 |
|||||||
Finished goods |
$ | $ | ||||||
Semi-finished goods and work-in-process |
||||||||
Raw materials |
||||||||
Materials in-transit |
||||||||
Less: inventory reserve |
( |
) | ( |
) | ||||
Inventories, net |
$ | $ | ||||||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Change in reserve |
||||||||||||
Inventory reserve charged to costs of sales |
( |
) | ( |
) | ( |
) | ||||||
Sale of previously reserved inventory |
||||||||||||
( |
) | ( |
) | ( |
) | |||||||
Write off |
||||||||||||
Translation adjustments |
||||||||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
December 31, |
||||||||
2023 |
2022 |
|||||||
Buildings and related structures |
$ | $ | ||||||
Machinery and equipment |
||||||||
Finance lease right-of-use |
||||||||
Others |
||||||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||
Land |
||||||||
Construction in progress |
||||||||
Property, plant and equipment, net |
$ | $ | ||||||
December 31, 2023 |
||||||||||||
Gross amount |
Accumulated amortization |
Net amount |
||||||||||
Intellectual property assets |
$ | $ | ( |
) | $ | |||||||
Intangible assets |
$ | $ | ( |
) | $ | |||||||
December 31, 2022 |
||||||||||||
Gross amount |
Accumulated amortization |
Net amount |
||||||||||
Intellectual property assets |
$ | $ | ( |
) | $ | |||||||
Intangible assets |
$ | $ | ( |
) | $ | |||||||
December 31, |
||||||||||
Leases |
Classification |
2023 |
2022 |
|||||||
Assets |
||||||||||
Operating lease |
Operating lease right-of-use |
$ | $ | |||||||
Finance lease |
||||||||||
Total lease assets |
$ | $ | ||||||||
Liabilities |
||||||||||
Current |
||||||||||
Operating |
Operating lease liabilities | $ | $ | |||||||
Finance |
||||||||||
Non-current |
||||||||||
Operating |
Non-current operating lease liabilities |
|||||||||
Finance |
||||||||||
Total lease liabilities |
$ | $ | ||||||||
December 31, |
||||||||
2023 |
2022 |
|||||||
Weighted average remaining lease term |
||||||||
Operating leases |
||||||||
Finance leases |
||||||||
Weighted average discount rate |
||||||||
Operating leases |
% | % | ||||||
Finance leases |
% | % |
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Operating lease cost |
$ | $ | $ | |||||||||
Finance lease cost |
||||||||||||
Amortization of right-of-use |
||||||||||||
Interest on lease liabilities |
||||||||||||
Total lease cost |
$ | $ | $ | |||||||||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||||||
Operating cash flows from operating leases |
$ | $ | $ | |||||||||
Operating cash flows from finance leases |
||||||||||||
Financing cash flows from finance leases |
Operating Leases |
Leases |
|||||||
2024 |
$ | $ | ||||||
2025 |
||||||||
2026 |
||||||||
2027 |
||||||||
Total future lease payments |
||||||||
Less: Imputed interest |
( |
) | ( |
) | ||||
Present value of future payments |
$ | $ | ||||||
December 31, |
||||||||
2023 |
2022 |
|||||||
Payroll, benefits and related taxes, excluding severance benefits |
$ | $ | ||||||
Withholding tax attributable to intercompany interest income |
||||||||
Outside service fees |
||||||||
Others |
||||||||
|
|
|
|
|||||
Accrued expenses |
$ | $ | ||||||
|
|
|
|
Date of transaction |
Type of derivative |
Total notional amount |
Month of settlement | |||||||
|
$ | |||||||||
|
$ |
Date of transaction |
Type of derivative |
Total notional amount |
Month of settlement | |||||||
|
$ | |||||||||
|
$ | |||||||||
|
$ |
Derivatives designated as hedging instruments: |
December 31, |
|||||||||||
2023 |
2022 |
|||||||||||
Asset Derivatives: |
||||||||||||
Zero cost collars |
Other current assets | $ | $ | |||||||||
Liability Derivatives: |
||||||||||||
Zero cost collars |
Other current liabilities | $ | $ |
As of December 31, 2023 |
Gross amounts of recognized assets/liabilities |
Gross amounts offset in the balance sheets |
Net amounts of assets/liabilities presented in the balance sheets |
Gross amounts not offset in the balance sheets |
Net amount |
|||||||||||||||||||
Financial instruments |
Cash collateral pledged |
|||||||||||||||||||||||
Asset Derivatives: |
||||||||||||||||||||||||
Zero cost collars |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Liability Derivatives: |
||||||||||||||||||||||||
Zero cost collars |
$ | $ | $ | $ | $ | $ |
As of December 31, 2022 |
Gross amounts of recognized liabilities |
Gross amounts offset in the balance sheets |
Net amounts of liabilities presented in the balance sheets |
Gross amounts not offset in the balance sheets |
Net amount |
|||||||||||||||||||
Financial instruments |
Cash collateral pledged |
|||||||||||||||||||||||
Liability Derivatives: |
||||||||||||||||||||||||
Zero cost collars |
$ | $ | $ | $ | $ | ( |
) | $ |
Derivatives in ASC 815 Cash Flow Hedging Relationships |
Amount of Loss Recognized in AOCI on Derivatives |
Location/Amount of Loss Reclassified from AOCI Into Statement of Operations |
Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives |
|||||||||||||||||||||||||||||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||||||
Zero cost collars |
$ | ( |
) | $ | ( |
) | Net sales | $ | ( |
) | $ | ( |
) | Other income, net | $ | ( |
) | $ |
December 31, |
||||||||
Counterparty |
2023 |
2022 |
||||||
SC |
$ | $ | ||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
Year Ended December 31, |
||||||||
2023 |
2022 |
|||||||
Beginning balance |
$ | $ | ||||||
Provisions |
||||||||
Severance payments |
( |
) | ( |
) | ||||
Translation adjustments |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Less: Cumulative contributions to severance insurance deposit accounts |
( |
) | ( |
) | ||||
The National Pension Fund |
( |
) | ( |
) | ||||
Group severance insurance plan |
( |
) | ||||||
|
|
|
|
|||||
Accrued severance benefits, net |
$ | $ | ||||||
|
|
|
|
Severance Benefit |
||||
2024 |
$ | |||
2025 |
||||
2026 |
||||
2027 |
||||
2028 |
||||
2029 – 2033 |
Number of Restricted Stock Units |
Weighted Average Grant-Date Fair Value of Restricted Stock Units |
|||||||
Outstanding at January 1, 2023 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Outstanding at December 31, 2023 |
$ | |||||||
Number of Options |
Weighted Average Exercise Price of Stock Options |
Aggregate Intrinsic Value of Stock Options |
Weighted Average Remaining Contractual Life of Stock Options |
|||||||||||||
Outstanding at January 1, 2023 |
$ | $ | ||||||||||||||
Expired |
( |
) | — | — | ||||||||||||
Exercised |
( |
) | $ | — | ||||||||||||
Outstanding at December 31, 2023 |
$ | $ | ||||||||||||||
Vested and Exercisable at December 31, 2023 |
$ | $ | ||||||||||||||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Income (loss) before income tax expense (benefit) |
||||||||||||
Domestic |
$ | $ | ( |
) | $ | |||||||
Foreign |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
( |
) | ( |
) | |||||||||
|
|
|
|
|
|
|||||||
Current income tax expense (benefit) |
||||||||||||
Domestic |
||||||||||||
Foreign |
||||||||||||
Uncertain tax position liability (foreign) |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
Deferred income tax expense (benefit) |
||||||||||||
Domestic |
( |
) | ( |
) | ||||||||
Foreign |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
( |
) | |||||||||||
|
|
|
|
|
|
|||||||
Total income tax expense (benefit) |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Provision computed at statutory rates |
$ | ( |
) | $ | ( |
) | $ | |||||
Change in statutory tax rates |
( |
) | ||||||||||
Difference in foreign tax rates |
||||||||||||
Permanent differences |
||||||||||||
Derivative assets adjustment |
( |
) | ( |
) | ( |
) | ||||||
TPECs, hybrid and other interest |
( |
) | ( |
) | ( |
) | ||||||
Equity-based compensation |
( |
) | ( |
) | ( |
) | ||||||
Permanent foreign currency gain (loss) |
( |
) | ||||||||||
Penalty |
||||||||||||
GILTI |
— | |||||||||||
Intercompany debt restructuring |
— | |||||||||||
Other permanent differences |
( |
) | ||||||||||
Withholding tax |
( |
) | ||||||||||
State net operating loss write off |
— | — | ||||||||||
Change in valuation allowance |
( |
) | ( |
) | ( |
) | ||||||
Tax credits claimed |
( |
) | ( |
) | ( |
) | ||||||
Uncertain tax positions liability |
( |
) | ( |
) | ( |
) | ||||||
Change in net operating loss carry-forwards |
( |
) | ||||||||||
Foreign local taxes |
||||||||||||
Others |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Income tax expense (benefit) |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||
2023 |
2022 |
|||||||
Deferred tax assets |
||||||||
Inventory reserves |
$ | $ | ||||||
Accrued expenses |
||||||||
Property, plant and equipment |
||||||||
Accumulated severance benefits |
||||||||
Operating lease right-of-use |
||||||||
Foreign currency translation loss |
||||||||
NOL carry-forwards |
||||||||
Tax credit carry-forwards |
||||||||
Other long-term payable |
||||||||
Interest expense deduction limitation |
||||||||
Derivative liabilities |
||||||||
Others |
||||||||
Total deferred tax assets |
||||||||
Less: Valuation allowance |
( |
) | ( |
) | ||||
Deferred tax liabilities |
||||||||
Prepaid expense |
||||||||
Severance benefit deposits |
||||||||
Operating lease right-of-use |
||||||||
Foreign currency translation gain |
||||||||
Others |
||||||||
Total deferred tax liabilities |
||||||||
Net deferred tax assets |
$ | $ | ||||||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Reductions |
( |
) | ( |
) | ( |
) | ||||||
Translation adjustments |
( |
) | ( |
) | ||||||||
Ending balance |
$ | $ | $ | |||||||||
Year Ended December 31, |
||||||||||||
2023 |
2022 |
20210 |
||||||||||
NOL carry-forwards |
$ | $ | $ |
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Unrecognized tax benefits, balance at the beginning |
$ | $ | $ | |||||||||
Additions based on tax positions related to the current year |
||||||||||||
Lapse of statute of limitations |
( |
) | ( |
) | ( |
) | ||||||
Translation adjustments |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Unrecognized tax benefits, balance at the ending |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Revenues |
||||||||||||
Standard products business |
||||||||||||
Display Solutions |
$ | $ | $ | |||||||||
Power Solutions |
||||||||||||
|
|
|
|
|
|
|||||||
Total standard products business |
||||||||||||
Transitional Fab 3 foundry services |
||||||||||||
|
|
|
|
|
|
|||||||
Total revenues |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Gross Profit |
||||||||||||
Standard products business |
$ | $ | $ | |||||||||
Transitional Fab 3 foundry services |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Total gross profit |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Korea |
$ | $ | $ | |||||||||
Asia Pacific (other than Korea) |
||||||||||||
United States |
||||||||||||
Europe |
||||||||||||
Others |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||
2023 |
2022 |
|||||||
Foreign currency translation adjustments |
$ | ( |
) | $ | ( |
) | ||
Derivative adjustments |
( |
) | ||||||
|
|
|
|
|||||
Total |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
Year Ended December 31, 2023 |
Foreign currency translation adjustments |
Derivative adjustments |
Total |
|||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Other comprehensive loss before reclassifications |
( |
) | ( |
) | ( |
) | ||||||
Amounts reclassified from accumulated other comprehensive loss |
||||||||||||
|
|
|
|
|
|
|||||||
Net current-period other comprehensive income (loss) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | $ | ( |
) | |||||
|
|
|
|
|
|
Year Ended December 31, 2022 |
Foreign currency translation adjustments |
Derivative adjustments |
Total |
|||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Other comprehensive loss before reclassifications |
( |
) | ( |
) | ( |
) | ||||||
Amounts reclassified from accumulated other comprehensive loss |
||||||||||||
|
|
|
|
|
|
|||||||
Net current-period other comprehensive income (loss) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Year Ended December 31, 2021 |
Foreign currency translation adjustments |
Derivative adjustments |
Total |
|||||||||
Beginning balance |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Other comprehensive loss before reclassifications |
( |
) | ( |
) | ( |
) | ||||||
Amounts reclassified from accumulated other comprehensive loss |
||||||||||||
|
|
|
|
|
|
|||||||
Net current-period other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
(In thousands of U.S. dollars, except share data) |
||||||||||||
Basic earnings (loss) per share |
||||||||||||
Net income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Basic weighted average common stock outstanding |
||||||||||||
Basic earnings (loss) per common share |
$ | ( |
) | $ | ( |
) | $ | |||||
Diluted earnings (loss) per share |
||||||||||||
Net income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
Add back: Interest expense on |
||||||||||||
|
|
|
|
|
|
|||||||
Net income (loss) allocated to common stockholders |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Basic weighted average common stock outstanding |
||||||||||||
Net effect of dilutive equity awards |
||||||||||||
Net effect of assumed conversion of |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted weighted average common stock outstanding |
||||||||||||
Diluted earnings (loss) per common share |
$ | ( |
) | $ | ( |
) | $ |
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Options |
||||||||||||
Restricted Stock Units |
1. | Financial Statements |
2. | Financial Statement Schedules |
3. | Exhibits |
Exhibit No. |
Exhibit Description | |
10.33* |
||
10.34* |
||
10.35* |
||
10.36 |
||
21.1# |
||
23.1# |
||
31.1# |
||
31.2# |
||
32.1† |
||
32.2† |
||
97.1*# |
||
101.INS# |
Inline XBRL Instance Document | |
101.SCH# |
Inline XBRL Taxonomy Extension Schema Document | |
101.CAL# |
Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF# |
Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB# |
Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE# |
Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* |
Management contract, compensatory plan or arrangement |
# |
Filed herewith |
† |
Furnished herewith |
By: |
/s/ Young-Joon Kim | |||
Name: |
Young-Joon Kim | |||
Title: |
Chief Executive Officer and Director | |||
Date: |
March 8, 2024 |
Date | ||
/s/ Young-Joon Kim |
March 8, 2024 | |
Young-Joon Kim, Chief Executive Officer and Director (Principal Executive Officer) |
||
/s/ Shin Young Park |
March 8, 2024 | |
Shin Young Park, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
||
/s/ Ilbok Lee |
March 8, 2024 | |
Ilbok Lee, Director |
||
/s/ Camillo Martino |
March 8, 2024 | |
Camillo Martino, Non-Executive Chairman of the Board of Directors |
||
/s/ Gilbert Nathan |
March 8, 2024 | |
Gilbert Nathan, Director |
||
/s/ Liz Chung |
March 8, 2024 | |
Liz Chung, Director |
Exhibit 4.1
DESCRIPTION OF REGISTRANT’S SECURITIES
The following brief description of the capital stock of Magnachip Semiconductor Corporation (“us”, “our”, “we”, or the “Company”) is a summary. This summary is not complete and is subject to and qualified in its entirety by reference to the complete text of our Certificate of Incorporation (“Certificate of Incorporation”), and our Amended and Restated Bylaws (“Bylaws”) previously filed with the U.S. Securities and Exchange Commission and incorporated by reference as an exhibit to this Annual Report on Form 10-K of which this Exhibit 4.1 forms a part. We encourage you to read the Certificate of Incorporation and Bylaws carefully.
General
The Certificate of Incorporation provides that the Company may issue 155,000,000 shares of capital stock, of which 150,000,000 shares are designated as common stock, par value $0.01 per share, and 5,000,000 shares are designated as of preferred stock, par value $0.01 per share.
Common Stock
Voting Rights
Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Our stockholders do not have cumulative voting rights in the election of directors. Except as required by law or our Certificate of Incorporation and Bylaws, the vote of a majority of the shares represented in person or by proxy at any meeting at which a quorum is present will be sufficient for the transaction of any business at a meeting.
Dividends
Subject to preferences held by, or that may be granted to, any outstanding shares of preferred stock, holders of our common stock will be entitled to receive ratably those dividends as may be declared by our board of directors out of funds legally available for such distributions, as well as any other distributions made to our stockholders.
Other Rights
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in all of our assets remaining after we pay our liabilities and any liquidation preferences granted to the holders of outstanding shares of preferred stock.
Holders of our common stock have no preemptive or other subscription or conversion rights.
There are no redemption or sinking fund provisions applicable to our common stock.
Preferred Stock
The Certificate of Incorporation authorizes the issuance of 5,000,000 shares of blank check preferred stock with such designation, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock. The preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us.
Certain Anti-Takeover Effects of Delaware Law
We are subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), regulating corporate takeovers and which has an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that might result in a premium over the market price for shares of our common stock. In general, those provisions prohibit a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless:
• | the transaction is approved by the board of directors before the date the interested stockholder attained that status; |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or |
• | on or after such date, the business combination is approved by the board of directors and authorized at a meeting of stockholders, and not by written consent, by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
In general, DGCL Section 203 defines a business combination to include the following:
• | any merger or consolidation involving the corporation and the interested stockholder; |
• | any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
• | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
• | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
In general, DGCL Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by any such entity or person.
A Delaware corporation may opt out of this provision by express provision in its original certificate of incorporation or by amendment to its certificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of this provision.
Certain Provisions of the Certificate of Incorporation and Bylaws
Provisions in the Certificate of Incorporation and Bylaws may have the effect of delaying or preventing a change of control or changes in our management. Among other things, the Certificate of Incorporation and Bylaws:
• | authorize our board of directors to issue, without stockholder approval, preferred stock with such terms as our board of directors may determine; |
• | prohibit action by written consent of our stockholders; |
• | prohibit any person other than our board of directors, the chairman of our board of directors, our Chief Executive Officer or holders of at least 25% of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors to call a special meeting of our stockholders; and |
• | specify advance notice requirements for stockholder proposals and director nominations. |
Our common stock is listed on The New York Stock Exchange under the symbol “MX.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Equiniti Trust Company, LLC.
Exhibit 21.1
SUBSIDIARIES OF MAGNACHIP SEMICONDUCTOR CORPORATION
Subsidiary | Jurisdiction of Incorporation | |
|
| |
MagnaChip Semiconductor S.A. |
Luxembourg | |
MagnaChip Semiconductor B.V. |
The Netherlands | |
Magnachip Semiconductor, Ltd. |
Korea | |
Magnachip Mixed-Signal, Ltd. |
Korea | |
MagnaChip Semiconductor SA Holdings LLC |
Delaware | |
MagnaChip Semiconductor Limited |
Taiwan | |
Magnachip Semiconductor Limited |
Hong Kong SAR | |
Magnachip Technology Holding Company, Limited |
Hong Kong SAR | |
Magnachip Semiconductor Inc. |
Japan | |
MagnaChip Semiconductor Holding Company Limited |
British Virgin Islands | |
Magnachip Semiconductor (Shanghai) Company Limited |
China | |
Magnachip Technology Company, Ltd. |
China |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-172864, 333-180696, 333-186789, 333-202120, 333-209756, 333-216204, 333-223155, 333-229811, 333-236565, 333-239872 and 333-272902) of Magnachip Semiconductor Corporation of our report dated March 8, 2024 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ Samil PricewaterhouseCoopers |
Seoul, Korea |
March 8, 2024 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Young-Joon Kim, certify that:
1. | I have reviewed this annual report on Form 10-K of Magnachip Semiconductor Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: March 8, 2024
/s/ Young-Joon Kim |
Young-Joon Kim |
Chief Executive Officer |
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Shin Young Park, certify that:
1. | I have reviewed this annual report on Form 10-K of Magnachip Semiconductor Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: March 8, 2024
/s/ Shin Young Park |
Shin Young Park |
Chief Financial Officer |
(Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Magnachip Semiconductor Corporation (the “Company”) hereby certifies, to such officer’s knowledge, that:
(i) the Annual Report on Form 10-K of the Company for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
Dated: March 8, 2024
/s/ Young-Joon Kim |
Young-Joon Kim |
Chief Executive Officer |
(Principal Executive Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Magnachip Semiconductor Corporation (the “Company”) hereby certifies, to such officer’s knowledge, that:
(i) the Annual Report on Form 10-K of the Company for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
Dated: March 8, 2024
/s/ Shin Young Park |
Shin Young Park |
Chief Financial Officer |
(Principal Financial Officer and Principal Accounting Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 97.1
MAGNACHIP SEMICONDUCTOR CORPORATION
COMPENSATION RECOVERY POLICY
Adopted as of November 15, 2023
Magnachip Semiconductor Corporation, a Delaware corporation (the “Company”), has adopted this Compensation Recovery Policy (this “Policy”) as described below. This Policy is effective as of October 2, 2023 (the “Effective Date”) and replaces, effective as of that date, the Company’s Clawback Policy adopted as of October 23, 2017 (the “Prior Policy”). The Prior Policy remains in effect with respect to the compensation received prior to the Effective Date. Capitalized terms not otherwise defined when first used herein shall have the respective meanings ascribed to them in Section 3 below.
1. Overview
The Policy sets forth the circumstances and procedures under which the Company (or its subsidiary) shall recover Erroneously Awarded Compensation from Covered Persons in accordance with the rules issued by the United States Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the NYSE. This Policy also sets forth the circumstances and procedures under which the Company (or its subsidiary) may recover Incentive-Based Compensation and other equity-based compensation from Covered Persons and Participating Employees as set forth in Sections 5 and 6 below.
2. Compensation Recovery Requirement
In the event that the Company is required to prepare a Financial Restatement, the Company (or its subsidiary) shall recover reasonably promptly all Erroneously Awarded Compensation with respect to such Financial Restatement.
3. Definitions
a. “Applicable Recovery Period” means the three (3) completed fiscal years immediately preceding the Restatement Date for a Financial Restatement. In addition, in the event the Company has changed its fiscal year, (i) any transition period of less than nine (9) months occurring within or immediately following such three (3) completed fiscal years shall also be part of such Applicable Recovery Period, and (ii) any transition period of nine (9) to 12 months will be deemed to be a completed fiscal year.
b. “Applicable Rules” means any rules or regulations adopted by the NYSE pursuant to Rule 10D-1 under the Exchange Act and any applicable rules or regulations adopted by the SEC pursuant to Section 10D of the Exchange Act.
c. “Board” means the Board of Directors of the Company.
d. “Committee” means the Compensation Committee of the Board or, in the absence of such committee, a majority of independent directors serving on the Board.
e. “Covered Person” means any Executive Officer. A person’s status as a Covered Person with respect to Erroneously Awarded Compensation shall be determined as of the time of receipt of such Erroneously Awarded Compensation regardless of the person’s current role or status with the Company. For example, if a person began service as an Executive Officer after the beginning of an Applicable Recovery Period, that person would not be considered a Covered Person with respect to Erroneously Awarded Compensation received before the person began service as an Executive Officer, but would be considered a Covered Person with respect to Erroneously Awarded Compensation received after the person began service as an Executive Officer where such person served as an Executive Officer at any time during the performance period for such Erroneously Awarded Compensation.
f. “Erroneously Awarded Compensation” means the amount of any Incentive-Based Compensation received by a Covered Person on or after the Effective Date and during the Applicable Recovery Period that exceeds the amount that otherwise would have been received by the Covered Person had such compensation been determined based on the restated amounts in a Financial Restatement, computed without regard to any taxes paid. Calculation of Erroneously Awarded Compensation with respect to Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in a Financial Restatement, shall be based on a reasonable estimate of the effect of the Financial Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was based, and the Company shall maintain documentation of the determination of such reasonable estimate and provide such documentation to the NYSE in accordance with the Applicable Rules. Incentive-Based Compensation is deemed received, earned or vested when the Financial Reporting Measure is attained, not when the actual payment, grant or vesting occurs.
g. “Executive Officer” means any person who served the Company in any of the following roles at any time during the performance period applicable to Incentive-Based Compensation such person received during service in such role: president, principal executive officer, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Officers of parents or subsidiaries of the Company may be deemed Executive Officers if they perform such policy-making functions for the Company.
h. “Financial Reporting Measures” mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, any measures that are derived wholly or in part from such measures (including, for example, a non-GAAP financial measure), and stock price and total shareholder return.
i. “Financial Restatement” means a restatement of previously issued financial statements of the Company due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required restatement to correct an error in previously-issued financial statements that is material to the previously-issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
2
j. “Incentive-Based Compensation” means any compensation provided, directly or indirectly, by the Company (or its subsidiary) that is granted, earned or vested based, in whole or in part, upon the attainment of a Financial Reporting Measure.
k. “Participating Employee” means any current or former employee of the Company (or its subsidiary) who is not a Covered Person and who received Incentive-Based Compensation from the Company (or its subsidiary) during an Applicable Recovery Period.
l. “NYSE” means the New York Stock Exchange.
m. “Restatement Date” means, with respect to a Financial Restatement, the earlier to occur of: (i) the date on which the Board or the Audit Committee of the Board concludes, or reasonably should have concluded, that the Company is required to prepare the Financial Restatement or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare the Financial Restatement.
4. Exception to Compensation Recovery Requirement
The Company may elect not to recover Erroneously Awarded Compensation pursuant to this Policy if the Committee determines that recovery would be impracticable, and one or more of the following conditions, together with any further requirements set forth in the Applicable Rules, are met: (i) the direct expense paid to a third party, including outside legal counsel, to assist in enforcing this Policy would exceed the amount to be recovered, and the Company and its subsidiaries have made a reasonable attempt to recover such Erroneously Awarded Compensation; or (ii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to be so qualified under applicable regulations.
5. Discretionary Compensation Recovery Circumstances
In addition to (and without limiting) the provisions of Section 2 above, in the event that the Company is required to prepare a Financial Restatement after the Effective Date, the Company (or its subsidiary) may recover from any Participating Employee, the amount that exceeds what would have been paid to the Participating Employee under the Financial Restatement; provided that this Section 5 will apply only to the extent the Board or the Committee, in its sole discretion, determines that the Participating Employee committed any act or omission that materially contributed to the circumstances requiring the Financial Restatement and such act or omission involved any of the following: (i) misconduct, wrongdoing or a violation of any rule, policy or the like of the Company (or its subsidiary) or of any applicable legal or regulatory requirements in the course of the Participating Employee’s employment with the Company (or its subsidiary); or (ii) a breach of a fiduciary duty to the Company (or its subsidiary) or its stockholders by the Participating Employee.
3
6. Recovery Where Intentional Misconduct
In addition to (and without limiting) the provisions of Section 2 and 5 above, in the event the Company is required to prepare a Financial Restatement after the Effective Date and the Board or the Committee, in its sole discretion, determines that a Covered Person’s or a Participating Employee’s act or omission contributed to the circumstances requiring the Financial Restatement and such act or omission involved any of the following: (i) willful, knowing or intentional misconduct or a willful, knowing or intentional violation of any rule, policy or the like of the Company (or its subsidiary) or of any applicable legal or regulatory requirements in the course of the Participating Employee’s employment with the Company (or its subsidiary); or (ii) fraud in the course of the Covered Person’s or the Participating Employee’s employment with the Company (or its subsidiary), the Company (or its subsidiary) may recover from such Covered Person or Participating Employee up to 100% (as determined by the Board or the Committee in its sole discretion) of the Incentive-Based Compensation and any other equity-based compensation provided by the Company or any of its subsidiaries, including, without limitation, stock options, restricted stock awards, restricted stock units and stock appreciation rights received by such Covered Person or Participating Employee from the Company (or its subsidiary) during the Applicable Recovery Period.
7. Tax Considerations
To the extent that, pursuant to this Policy, the Company (or its subsidiary) is entitled to recover any Erroneously Awarded Compensation that is received by a Covered Person, the gross amount received (i.e., the amount the Covered Person received, or was entitled to receive, before any deductions for tax withholding or other payments) shall be returned by the Covered Person.
8. Method of Compensation Recovery
The Committee shall determine, in its sole discretion, the method for recovering Erroneously Awarded Compensation hereunder, which may include, without limitation, any one or more of the following:
a. | requiring reimbursement of cash Incentive-Based Compensation previously paid; |
b. | seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity-based awards; |
c. | cancelling or rescinding some or all outstanding vested or unvested equity-based awards; |
d. | adjusting or withholding from unpaid compensation or other set-off; |
e. | cancelling or offsetting against planned future grants of equity-based awards; and/or |
f. | any other method permitted by applicable law or contract. |
4
Notwithstanding the foregoing, a Covered Person will be deemed to have satisfied such person’s obligation to return Erroneously Awarded Compensation to the Company if such Erroneously Awarded Compensation is returned in the exact same form in which it was received; provided that equity withheld to satisfy tax obligations will be deemed to have been received in cash in an amount equal to the tax withholding payment made.
9. Policy Interpretation
This Policy shall be interpreted in a manner that is consistent with the Applicable Rules and any other applicable law. The Committee shall take into consideration any applicable interpretations and guidance of the SEC in interpreting this Policy, including, for example, in determining whether a financial restatement qualifies as a Financial Restatement hereunder. To the extent that the Applicable Rules require recovery of Incentive-Based Compensation in additional circumstances besides those specified above, nothing in this Policy shall be deemed to limit or restrict the right or obligation of the Company to recover Incentive-Based Compensation to the fullest extent required by the Applicable Rules.
10. Policy Administration
This Policy shall be administered by the Committee. The Committee shall have such powers and authorities related to the administration of this Policy as are consistent with the governing documents of the Company and applicable law. The Committee shall have full power and authority to take, or direct the taking of, all actions and to make all determinations required or provided for under this Policy and shall have full power and authority to take, or direct the taking of, all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of this Policy that the Committee deems to be necessary or appropriate to the administration of this Policy. The interpretation and construction by the Committee of any provision of this Policy and all determinations made by the Committee under this Policy shall be final, binding and conclusive.
11. Compensation Recovery Repayments not Subject to Indemnification
Notwithstanding anything to the contrary set forth in any agreement with, or the organizational documents of, the Company or any of its subsidiaries, Covered Persons are not entitled to indemnification for Erroneously Awarded Compensation or for any claim or losses arising out of or in any way related to Erroneously Awarded Compensation recovered under this Policy.
5