Concerns Arise Over MBK Partners and Young Poong’s Hostile Takeover Bid Targeting Korea Zinc’s Role in Semiconductor Supply Chain
A hostile takeover attempt led by MBK Partners and Young Poong is raising alarms about potential risks to the global semiconductor supply chain. Korea Zinc (KRX:010130), a major supplier of sulfuric acid used in semiconductor manufacturing, is critical in providing this essential material to industry leaders like Samsung Electronics and SK Hynix. A successful acquisition could threaten the reliable delivery of high-quality sulfuric acid and undermine efforts to establish a secure, China-free semiconductor supply chain.
Korea Zinc’s Importance to Samsung and SK Hynix
The semiconductor sulfuric acid market in South Korea is approximately 380,000 tons per year, with Korea Zinc supplying 240,000 tons and LS MnM Inc. providing the remaining 140,000 tons. Samsung Electronics and SK Hynix account for over 98% of this consumption, relying on sulfuric acid for the cleaning of semiconductor wafers—a vital process that directly influences production yield and quality.
Due to strict quality requirements and the need for timely deliveries, imports of semiconductor sulfuric acid are limited, making Korea Zinc and LS MnM the only domestic producers. Korea Zinc’s current production capacity is 280,000 tons annually, with ongoing expansions projected to raise this to 320,000 tons by 2026. The company aims to eventually increase its production to over 500,000 tons per year.
The sulfuric acid required for semiconductor processing must meet exceptionally high purity standards, demanding specialized expertise and rigorous process controls. Samsung and SK Hynix conduct comprehensive audits of their suppliers’ production processes and enforce strict quality standards before approving materials for their manufacturing lines.
Any disruption in the supply or quality of this critical material could halt operations at major semiconductor plants, including Samsung’s facilities in Pyeongtaek, Hwaseong, and Giheung, as well as SK Hynix’s plants in Icheon, Cheongju, and Wuxi. Continuous communication between Korea Zinc and its clients is crucial for maintaining supply chain stability and resolving any technical challenges.
Threats from Hostile Takeover Bid
The management dispute between Korea Zinc and MBK Partners is closely watched by Samsung and SK Hynix, both of which understand the importance of Korea Zinc’s products. Industry experts express concern that a private equity takeover, driven by short-term financial goals, could jeopardize the long-term investments necessary for maintaining and expanding Korea Zinc’s production capacity.
This worry is heightened as South Korea pursues significant semiconductor fabrication plant expansions. SK Hynix is investing KRW 122 trillion in new fabs in Yongin’s Wonsam-myeon, scheduled for completion by 2027, while Samsung has committed KRW 360 trillion to a new fab in Namsa-myeon in Yongin city, with construction starting in 2031. Upon completion, domestic demand for semiconductor sulfuric acid is anticipated to surpass 1 million tons annually.
Given the specialized technical expertise required to produce semiconductor sulfuric acid—a foundational material with high precision—only a limited number of plants, such as those operated by Korea Zinc, can meet the stringent quality standards due to their advanced contamination control technologies. Imported alternatives pose substantial risks regarding quality and supply reliability, highlighting the critical nature of Korea Zinc’s production capabilities.
The global semiconductor supply chain could face broader implications as well. Industry sources warn that if Korea Zinc were acquired by Chinese companies, they might prioritize supplying Chinese semiconductor manufacturers, potentially disrupting the essential flow of materials to Korean companies and impacting the U.S., a key competitor to China in the global AI sector.
As semiconductors remain South Korea’s largest export, Korea Zinc’s advanced technology, commitment to quality, and ongoing investment in production capacity are vital for ensuring a stable and secure supply chain for this critical material.
