How the Semiconductor Boom Upended the M&A Market: Why the SK Siltron Deal Stalled

Disagreement Continues Over the "5 Trillion Won" Price
Valuation Gap Widens Amid Semiconductor Boom
Shift Emerging in SK's Rebalancing Strategy

The SK Siltron sale, which seemed to be awaiting only a signature, has been abruptly halted. Just six months ago, SK Siltron was regarded as a prime asset for SK Group's rebalancing, but the onset of the semiconductor supercycle driven by artificial intelligence (AI) has changed the situation. As the value of the semiconductor supply chain centered around SK hynix was reassessed, the calculations underlying the original decision to sell no longer held true.

Differing Valuations Widen Amid Memory Boom

SK Siltron Company Building Exterior

According to sources in the investment banking and business sectors on June 4, SK Group is thoroughly re-examining its plan to sell SK Siltron. In December of last year, Doosan Group was selected as the preferred bidder to acquire SK Siltron, the world's third-largest semiconductor wafer manufacturer. There were even expectations that the deal would be finalized by the end of May this year, but the transaction has stalled and remains adrift.

It is analyzed that a fundamental difference in price perception existed from the outset, which has prolonged negotiations. SK Siltron's valuation has been estimated at around 5 trillion won. Doosan calculated the value conservatively, taking into account the poor performance of SK Siltron's U.S. subsidiary and the burden of future investments. SK, on the other hand, believed that both the company's strategic position as the third-largest wafer maker globally and its long-term growth potential should be reflected in the price.

On the 2nd, at the COMPUTEX 2026 event in Taiwan, SK Group Chairman Tae-Won Choi (left) and Jensen Huang, CEO of Nvidia, met onsite. SK hynix website

On top of this, the AI-driven memory boom has further widened the gap in expectations between the two sides. An investment banking industry source explained, "SK hynix generates profits through price (P), while SK Siltron generates profits through volume (Q), which is the fundamental difference."

SK hynix's strong performance is largely due to price increases resulting from soaring demand for AI memory. High value-added memory products, including HBM, have seen prices surge as supply cannot keep up with demand. This means that even selling the same quantity yields higher profits.

In contrast, the situation is different for the wafers produced by SK Siltron. Even if memory prices rise, wafer prices do not increase to the same extent. Wafers are typically supplied under long-term contracts, and their prices are relatively less volatile. Ultimately, performance improvements depend on how many wafers are actually used and supplied, rather than on price increases. In other words, even in a semiconductor boom, the approach to corporate valuation must differ.

SK Group's Rebalancing Strategy Shifts...Intensified Focus on Semiconductors

The planned sale of SK Siltron was part of SK Group's rebalancing strategy. Throughout 2023 and 2024, the semiconductor market was in a slump, and SK Group felt pressure to improve its financial structure by selling non-core assets. Concerns about falling wafer prices, oversupply, U.S.-China tensions, and large-scale investment burdens also made holding onto SK Siltron a challenge.

However, in just half a year, the circumstances have changed completely. With the AI boom, SK hynix is now enjoying unprecedented prosperity. On June 2, at the SK hynix booth during COMPUTEX 2026 in Taipei, Taiwan, Chairman Tae-Won Choi told reporters, "We will double our wafer production capacity within the next five years." He also stated, "The memory bottleneck will persist until 2030," thereby formalizing SK hynix's aggressive expansion plans. The industry expects that increased memory production will naturally drive up demand for wafers, the essential raw material.

As a result, there are growing calls within SK Group to reassess the strategic value of SK Siltron. As the supplier of wafers—the starting point of semiconductor production—SK Siltron is no longer seen as just an affiliate, but is being reevaluated as a core pillar of the AI semiconductor value chain.

An investment banking industry source said, "The reason the SK Siltron deal stalled is not just about price. The AI-driven semiconductor supercycle has fundamentally reshaped the price benchmarks. Whereas SK Siltron was previously viewed as an asset that could be liquidated, it is now increasingly seen as a foundational asset for future growth."

Stock Market Boom Sends Ripples Through M&A Market

Meanwhile, in the recent M&A market, there are more and more cases where price, rather than deal structure, has become the main stumbling block. The sale of management rights in IGIS Asset Management has dragged on due to disagreements over corporate value, and HS Hyosung Advanced Materials has withdrawn the sale of its tire steel cord business. Doosan Bobcat's planned acquisition of Germany's Wacker Neuson also fell through.

An industry insider said, "Sellers are demanding higher prices based on rising share prices of comparable companies, while buyers now have grounds to stick to conservative prices, citing higher interest rates and uncertainty." He added, "Ironically, the recent stock market boom is making M&A deals more challenging."

This content was produced with the assistance of AI translation services.