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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Magnachip Semiconductor Corp | NYSE:MX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.96 | 1 | 14:14:52 |
QUARTERLY 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(s) |
Name of each exchange on which registered | ||
☒ |
Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page No. | ||||||
3 | ||||||
Item 1. |
3 | |||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
7 | ||||||
Magnachip Semiconductor Corporation and Subsidiaries Notes to Consolidated Financial Statements |
8 | |||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 | ||||
Item 3. |
44 | |||||
Item 4. |
45 | |||||
46 | ||||||
Item 1. |
46 | |||||
Item 1A. |
46 | |||||
Item 2. |
47 | |||||
Item 3. |
47 | |||||
Item 4. |
47 | |||||
Item 5. |
47 | |||||
Item 6. |
48 | |||||
49 |
2
Item 1. |
Interim Consolidated Financial Statements (Unaudited) |
September 30, 2023 |
December 31, 2022 |
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(In thousands of U.S. dollars, except share data) |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
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Inventories, net |
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Other receivables |
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Prepaid expenses |
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Hedge collateral (Note 6) |
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Other current assets (Note 16) |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use |
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Intangible assets, net |
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Long-term prepaid expenses |
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Deferred income taxes |
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Other non-current assets |
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
$ | $ | ||||||
Other accounts payable |
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Accrued expenses |
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Accrued income taxes |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Accrued severance benefits, net |
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Non-current operating lease liabilities |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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Stockholders’ equity |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Treasury stock, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three Months Ended |
Nine Months Ended |
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September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
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(In thousands of U.S. dollars, except share data) |
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Revenues: |
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Net sales – standard products business |
$ | $ | $ | $ | ||||||||||||
Net sales – transitional Fab 3 foundry services |
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Total revenues |
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Cost of sales: |
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Cost of sales – standard products business |
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Cost of sales – transitional Fab 3 foundry services |
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Total cost of sales |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative expenses |
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Research and development expenses |
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Early termination and other charges, net |
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Total operating expenses |
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Operating income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||
Interest income |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Foreign currency loss, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income, net |
||||||||||||||||
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Loss before income tax expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax benefit |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
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|
|
|
|
|
|||||||||
Basic loss per common share— |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Diluted loss per common share— |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted average number of shares— |
||||||||||||||||
Basic |
||||||||||||||||
Diluted |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
(In thousands of U.S. dollars) |
||||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive loss |
||||||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Derivative adjustments |
||||||||||||||||
Fair valuation of derivatives |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Reclassification adjustment for loss on derivatives included in net loss |
||||||||||||||||
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|||||||||
Total other comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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|
|||||||||
Total comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
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Additional Paid-In Capital |
Accumulated Other Comprehensive Loss |
|||||||||||||||||||||||||||
Common Stock |
Retained Earnings |
Treasury Stock |
Total |
|||||||||||||||||||||||||
(In thousands of U.S. dollars, except share data) |
Shares |
Amount |
||||||||||||||||||||||||||
Three Months Ended September 30, 2023: |
||||||||||||||||||||||||||||
Balance at June 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Settlement of restricted stock units |
( |
) | — | — | — | ( |
) | |||||||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
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|
|||||||||||||||
Three Months Ended September 30, 2022: |
||||||||||||||||||||||||||||
Balance at June 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Settlement of restricted stock units |
— | — | ( |
) | — | — | — | ( |
) | |||||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
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|
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|
|||||||||||||||
Balance at September 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-In Capital |
Accumulated Other Comprehensive Loss |
|||||||||||||||||||||||||||
Common Stock |
Retained Earnings |
Treasury Stock |
Total |
|||||||||||||||||||||||||
(In thousands of U.S. dollars, except share data) |
Shares |
Amount |
||||||||||||||||||||||||||
Nine Months Ended September 30, 2023: |
||||||||||||||||||||||||||||
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 |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
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|
|||||||||||||||
Nine Months Ended September 30, 2022: |
||||||||||||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||||||
Settlement of restricted stock units |
( |
) | — | — | — | ( |
) | |||||||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Accelerated stock repurchase |
( |
) | — | — | ( |
) | — | — | ||||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||
September 30, 2023 |
September 30, 2022 |
|||||||
(In thousands of U.S. dollars) |
||||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
||||||||
Depreciation and amortization |
||||||||
Provision for severance benefits |
||||||||
Loss on foreign currency, net |
||||||||
Provision for inventory reserves |
||||||||
Stock-based compensation |
||||||||
Other, net |
||||||||
Changes in operating assets and liabilities |
||||||||
Accounts receivable, net |
( |
) | ||||||
Inventories |
( |
) | ||||||
Other receivables |
||||||||
Other current assets |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | ||||||
Other accounts payable |
( |
) | ( |
) | ||||
Accrued expenses |
||||||||
Accrued income taxes |
( |
) | ( |
) | ||||
Other current liabilities |
( |
) | ( |
) | ||||
Other non-current liabilities |
( |
) | ||||||
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 |
( |
) | ( |
) | ||||
Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
Payment for intellectual property registration |
( |
) | ( |
) | ||||
Collection of guarantee deposits |
||||||||
Payment of guarantee deposits |
( |
) | ( |
) | ||||
Other |
— | |||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities |
||||||||
Proceeds from exercise of stock options |
||||||||
Acquisition of treasury stock |
( |
) | ( |
) | ||||
Repayment of financing related to water treatment facility arrangement |
( |
) | ( |
) | ||||
Repayment of principal portion of finance lease liabilities |
( |
) | ( |
) | ||||
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 |
||||||||
Cash and cash equivalents at beginning of period |
||||||||
Cash and cash equivalents at end of period |
$ | $ | ||||||
Supplemental cash flow information |
||||||||
Cash paid for income taxes |
$ | $ | ||||||
Non-cash investing activities |
||||||||
Property, plant and equipment additions in other accounts payable |
$ | $ | ||||||
Non-cash financing activities |
||||||||
Unsettled common stock repurchases |
$ | $ |
September 30, 2023 |
December 31, 2022 |
|||||||
Finished goods |
$ | $ | ||||||
Semi-finished goods and work-in-process |
||||||||
Raw materials |
||||||||
Materials in-transit |
||||||||
Less: inventory reserve |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Inventories, net |
$ | $ | ||||||
|
|
|
|
Three Months Ended |
Nine Months Ended |
Three Months Ended |
Nine Months Ended |
|||||||||||||
September 30, 2023 |
September 30, 2022 |
|||||||||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Change in reserve |
||||||||||||||||
Inventory reserve charged to costs of sales |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Sale of previously reserved inventory |
||||||||||||||||
|
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|
|
|
|
|
|
|||||||||
( |
) | ( |
) | ( |
) | ( |
) | |||||||||
Write off |
||||||||||||||||
Translation adjustments |
||||||||||||||||
|
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|
|||||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
September 30, 2023 |
December 31, 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 |
$ | $ | ||||||
September 30, 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 |
$ | $ | ( |
) | $ | |||||||
September 30, 2023 |
December 31, 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 |
Total notional amount |
Month of settlement | ||||
$ | ||||||
$ | ||||||
$ | ||||||
$ | ||||||
$ |
Date of transaction |
Total notional amount |
Month of settlement | ||||
$ | ||||||
$ | ||||||
$ |
Derivatives designated as hedging instruments: |
September 30, 2023 |
December 31, 2022 |
||||||||||
Liability Derivatives: |
||||||||||||
Zero cost collars |
$ | $ |
As of September 30, 2023 |
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 |
$ | $ | $ | $ | $ | ( |
) | $ |
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 |
|||||||||||||||||||||||||||||
Three Months Ended September 30, |
Three Months Ended September 30, |
Three Months Ended September 30, |
||||||||||||||||||||||||||||||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||||||
Zero cost collars |
$ | ( |
) | $ | ( |
) | Net sales | $ | ( |
) | $ | ( |
) | Other income, net | $ | ( |
) | $ | ||||||||||||||
|
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|
|
|
|||||||||||||||||||||
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||
|
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|
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 |
|||||||||||||||||||||||||||||
Nine Months Ended September 30, |
Nine Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||||||
Zero cost collars |
$ | ( |
) | $ | ( |
) | Net sales | $ | ( |
) | $ | ( |
) | Other income, net | $ | ( |
) | $ | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||
|
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|
|
Counterparty |
September 30, 2023 |
December 31, 2022 |
||||||
SC |
$ | $ | ||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
Carrying Value September 30, 2023 |
Fair Value Measurement September 30, 2023 |
Quoted Prices in Active Markets for Identical Liability (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||||||
Liabilities: |
||||||||||||||||||||
Derivative 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: |
||||||||||||||||||||
Derivative liabilities (other current liabilities) |
$ | $ | — | $ | — |
Three Months Ended |
Nine Months Ended |
Three Months Ended |
Nine Months Ended |
|||||||||||||
September 30, 2023 |
September 30, 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 |
||||
Remainder of 2023 |
$ | |||
2024 |
$ | |||
2025 |
$ | |||
2026 |
$ | |||
2027 |
$ | |||
2028 |
$ | |||
2029 – 2033 |
$ |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
Revenues |
||||||||||||||||
Standard products business |
||||||||||||||||
Display Solutions |
$ | $ | $ | $ | ||||||||||||
Power Solutions |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total standard products business |
||||||||||||||||
Transitional Fab 3 foundry services |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
Gross Profit |
||||||||||||||||
Standard products business |
$ | $ | $ | $ | ||||||||||||
Transitional Fab 3 foundry services |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total gross profit |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
Korea |
$ | $ | $ | $ | ||||||||||||
Asia Pacific (other than Korea) |
||||||||||||||||
United States |
||||||||||||||||
Europe |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
September 30, 2023 |
December 31, 2022 |
|||||||
Foreign currency translation adjustments |
$ | ( |
) | $ | ( |
) | ||
Derivative adjustments |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
Three Months Ended September 30, 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 loss |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Three Months Ended September 30, 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 loss |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Nine Months Ended September 30, 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 loss |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Nine Months Ended September 30, 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 loss |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
(In thousands of U.S. dollars, except share data) |
||||||||||||||||
Basic loss per share |
||||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Basic weighted average common stock outstanding |
||||||||||||||||
Basic loss per common share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Diluted loss per share |
||||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Basic weighted average common stock outstanding |
||||||||||||||||
Net effect of dilutive equity awards |
||||||||||||||||
Diluted weighted average common stock outstanding |
||||||||||||||||
Diluted loss per share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
Options |
||||||||||||||||
Restricted Stock Units |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | 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. |
Three Months Ended September 30, 2023 |
Nine Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
Nine Months Ended September 30, 2022 |
|||||||||||||
(Dollars in millions) |
||||||||||||||||
Net loss |
$ | (5.2 | ) | $ | (30.6 | ) | $ | (17.2 | ) | $ | (11.0 | ) | ||||
Interest income |
(2.4 | ) | (7.9 | ) | (1.8 | ) | (3.6 | ) | ||||||||
Interest expense |
0.2 | 0.6 | 0.3 | 0.9 | ||||||||||||
Income tax benefit |
(4.4 | ) | (8.6 | ) | (3.9 | ) | (1.4 | ) | ||||||||
Depreciation and amortization |
4.1 | 12.6 | 3.6 | 11.2 | ||||||||||||
EBITDA |
$ | (7.7 | ) | $ | (33.8 | ) | $ | (19.0 | ) | $ | (3.8 | ) | ||||
Adjustments: |
||||||||||||||||
Equity-based compensation expense(a) |
2.2 | 5.4 | 0.9 | 4.5 | ||||||||||||
Foreign currency loss, net(b) |
2.6 | 4.8 | 12.8 | 20.5 | ||||||||||||
Derivative valuation loss (gain), net(c) |
0.2 | 0.2 | (0.1 | ) | (0.2 | ) | ||||||||||
Early termination and other charges, net(d) |
— | 9.3 | 2.5 | 3.3 | ||||||||||||
Adjusted EBITDA |
$ | (2.7 | ) | $ | (14.2 | ) | $ | (3.0 | ) | $ | 24.3 | |||||
(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 nine months ended September 30, 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 three and nine months ended September 30, 2022, this adjustment eliminates $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were 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 this adjustment 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 this adjustment is 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. |
Three Months Ended September 30, 2023 |
Nine Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
Nine Months Ended September 30, 2022 |
|||||||||||||
(Dollars in millions) |
||||||||||||||||
Operating income (loss) |
$ | (9.2 | ) | $ | (41.7 | ) | $ | (10.0 | ) | $ | 4.9 | |||||
Adjustments: |
||||||||||||||||
Equity-based compensation expense(a) |
2.2 | 5.4 | 0.9 | 4.5 | ||||||||||||
Early termination and other charges, net(b) |
— | 9.3 | 2.5 | 3.3 | ||||||||||||
Adjusted Operating Income (Loss) |
$ | (7.1 | ) | $ | (27.1 | ) | $ | (6.6 | ) | $ | 12.7 | |||||
(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 nine months ended September 30, 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 three and nine months ended September 30, 2022, this adjustment eliminates $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were 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 this adjustment 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 this adjustment is 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. |
Three Months Ended September 30, 2023 |
Nine Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
Nine Months Ended September 30, 2022 |
|||||||||||||
(Dollars in millions, except per share data) |
||||||||||||||||
Net loss |
$ | (5.2 | ) | $ | (30.6 | ) | $ | (17.2 | ) | $ | (11.0 | ) | ||||
Adjustments: |
||||||||||||||||
Equity-based compensation expense(a) |
2.2 | 5.4 | 0.9 | 4.5 | ||||||||||||
Foreign currency loss, net(b) |
2.6 | 4.8 | 12.8 | 20.5 | ||||||||||||
Derivative valuation loss (gain), net(c) |
0.2 | 0.2 | (0.1 | ) | (0.2 | ) | ||||||||||
Early termination and other charges, net(d) |
— | 9.3 | 2.5 | 3.3 | ||||||||||||
Income tax effect on non-GAAP adjustments(e) |
(1.3 | ) | (3.5 | ) | 2.3 | 7.5 | ||||||||||
Adjusted Net Income (Loss) |
$ | (1.6 | ) | $ | (14.4 | ) | $ | 1.1 | $ | 24.6 | ||||||
Reported loss per share – basic |
$ | (0.13 | ) | $ | (0.73 | ) | $ | (0.38 | ) | $ | (0.24 | ) | ||||
Reported loss per share – diluted |
$ | (0.13 | ) | $ | (0.73 | ) | $ | (0.38 | ) | $ | (0.24 | ) | ||||
Weighted average number of shares – basic |
40,145,290 | 41,747,255 | 44,865,266 | 45,119,214 | ||||||||||||
Weighted average number of shares – diluted |
40,145,290 | 41,747,255 | 44,865,266 | 45,119,214 | ||||||||||||
Adjusted Net Income (loss) per share – basic |
$ | (0.04 | ) | $ | (0.35 | ) | $ | 0.02 | $ | 0.55 | ||||||
Adjusted Net Income (loss) per share – diluted |
$ | (0.04 | ) | $ | (0.35 | ) | $ | 0.02 | $ | 0.53 | ||||||
Weighted average number of shares – basic |
40,145,290 | 41,747,255 | 44,865,266 | 45,119,214 | ||||||||||||
Weighted average number of shares – diluted |
40,145,290 | 41,747,255 | 45,747,255 | 46,134,231 |
(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 nine months ended September 30, 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 three and nine months ended September 30, 2022, this adjustment eliminates $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were 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 this adjustment 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 this adjustment is excluded. |
(e) | For the three and nine months ended September 30, 2023 and 2022, income tax effect on non-GAAP adjustments were calculated by calculating the tax benefit of each jurisdiction with or without the non-GAAP adjustments. For the three and nine months ended September 30, 2023, this adjustment eliminates the income tax effect on non-GAAP adjustments of negative $1.3 million and negative $3.5 million, respectively, which mainly related to our Korean subsidiary. For the three and nine months ended September 30, 2022, this adjustment eliminates the income tax effect on non-GAAP adjustments of $2.3 million and $7.5 million, respectively, which mainly related to our Korean subsidiary. |
• | 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. |
Three Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Total Revenues |
Amount |
% of Total Revenues |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
Net sales – standard products business |
$ | 51.6 | 84.3 | % | $ | 62.8 | 88.2 | % | $ | (11.2 | ) | |||||||||
Net sales – transitional Fab 3 foundry services |
9.6 | 15.7 | 8.4 | 11.8 | 1.2 | |||||||||||||||
Total revenues |
61.2 | 100.0 | 71.2 | 100.0 | (10.0 | ) | ||||||||||||||
Cost of sales |
||||||||||||||||||||
Cost of sales – standard products business |
36.8 | 60.1 | 45.5 | 63.9 | (8.7 | ) | ||||||||||||||
Cost of sales – transitional Fab 3 foundry services |
9.9 | 16.2 | 8.5 | 11.9 | 1.5 | |||||||||||||||
Total cost of sales |
46.8 | 76.4 | 54.0 | 75.8 | (7.2 | ) | ||||||||||||||
Gross profit |
14.5 | 23.6 | 17.2 | 24.2 | (2.7 | ) | ||||||||||||||
Selling, general and administrative expenses |
12.1 | 19.7 | 11.4 | 16.0 | 0.7 | |||||||||||||||
Research and development expenses |
11.6 | 19.0 | 13.3 | 18.7 | (1.7 | ) | ||||||||||||||
Other charges, net |
— | — | 2.5 | 3.5 | (2.5 | ) | ||||||||||||||
Operating loss |
(9.2 | ) | (15.1 | ) | (10.0 | ) | (14.1 | ) | 0.8 | |||||||||||
Interest income |
2.4 | 3.9 | 1.8 | 2.5 | 0.6 | |||||||||||||||
Interest expense |
(0.2 | ) | (0.3 | ) | (0.3 | ) | (0.4 | ) | 0.1 | |||||||||||
Foreign currency loss, net |
(2.6 | ) | (4.2 | ) | (12.8 | ) | (18.0 | ) | 10.2 | |||||||||||
Others, net |
0.1 | 0.1 | 0.2 | 0.2 | (0.1 | ) | ||||||||||||||
(0.3 | ) | (0.5 | ) | (11.1 | ) | (15.6 | ) | 10.8 | ||||||||||||
Loss before income tax expense |
(9.5 | ) | (15.6 | ) | (21.1 | ) | (29.7 | ) | 11.6 | |||||||||||
Income tax benefit |
(4.4 | ) | (7.1 | ) | (3.9 | ) | (5.5 | ) | (0.4 | ) | ||||||||||
Net loss |
$ | (5.2 | ) | (8.4 | ) | $ | (17.2 | ) | (24.2 | ) | $ | 12.0 | ||||||||
Three Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Total Revenues |
Amount |
% of Total Revenues |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
Net sales – standard products business |
||||||||||||||||||||
Display Solutions |
$ | 6.4 | 10.5 | % | $ | 6.4 | 8.9 | % | $ | 0.0 | ||||||||||
Power Solutions |
45.2 | 73.8 | 56.4 | 79.2 | (11.2 | ) | ||||||||||||||
Total standard products business |
51.6 | 84.3 | 62.8 | 88.2 | (11.2 | ) | ||||||||||||||
Net sales – transitional Fab 3 foundry services |
9.6 | 15.7 | 8.4 | 11.8 | 1.2 | |||||||||||||||
Total revenues |
$ | 61.2 | 100.0 | % | $ | 71.2 | 100.0 | % | $ | (10.0 | ) | |||||||||
Three Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Net Sales |
Amount |
% of Net Sales |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Gross Profit |
||||||||||||||||||||
Gross profit – standard products business |
$ | 14.8 | 28.7 | % | $ | 17.3 | 27.5 | % | $ | (2.5 | ) | |||||||||
Gross profit – transitional Fab 3 foundry services |
(0.3 | ) | (3.2 | ) | (0.0 | ) | (0.6 | ) | (0.3 | ) | ||||||||||
Total gross profit |
$ | 14.5 | 23.6 | % | $ | 17.2 | 24.2 | % | $ | (2.7 | ) | |||||||||
Three Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Net Sales – standard products business |
Amount |
% of Net Sales – standard products business |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Korea |
$ | 19.2 | 37.3 | % | $ | 23.9 | 38.0 | % | $ | (4.6 | ) | |||||||||
Asia Pacific (other than Korea) |
29.9 | 57.8 | 34.6 | 55.1 | (4.8 | ) | ||||||||||||||
United States |
1.2 | 2.4 | 2.7 | 4.3 | (1.5 | ) | ||||||||||||||
Europe |
1.3 | 2.5 | 1.6 | 2.5 | (0.3 | ) | ||||||||||||||
$ | 51.6 | 100.0 | % | $ | 62.8 | 100.0 | % | $ | (11.2 | ) | ||||||||||
Nine Months Ended September 30, 2023 |
Nine Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Total Revenues |
Amount |
% of Total Revenues |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
Net sales – standard products business |
$ | 154.5 | 86.2 | % | $ | 248.1 | 89.7 | % | $ | (93.6 | ) | |||||||||
Net sales – transitional Fab 3 foundry services |
24.7 | 13.8 | 28.6 | 10.3 | (3.9 | ) | ||||||||||||||
Total revenues |
179.2 | 100.0 | 276.7 | 100.0 | (97.4 | ) | ||||||||||||||
Cost of sales |
||||||||||||||||||||
Cost of sales – standard products business |
112.0 | 62.5 | 165.2 | 59.7 | (53.2 | ) | ||||||||||||||
Cost of sales – transitional Fab 3 foundry services |
27.1 | 15.1 | 26.3 | 9.5 | 0.8 | |||||||||||||||
Total cost of sales |
139.1 | 77.6 | 191.5 | 69.2 | (52.4 | ) | ||||||||||||||
Gross profit |
40.1 | 22.4 | 85.2 | 30.8 | (45.1 | ) | ||||||||||||||
Selling, general and administrative expenses |
36.4 | 20.3 | 38.3 | 13.8 | (1.9 | ) | ||||||||||||||
Research and development expenses |
36.2 | 20.2 | 38.7 | 14.0 | (2.5 | ) | ||||||||||||||
Early termination and other charges, net |
9.3 | 5.2 | 3.3 | 1.2 | 6.0 | |||||||||||||||
Operating income (loss) |
(41.7 | ) | (23.3 | ) | 4.9 | 1.8 | (46.6 | ) | ||||||||||||
Interest income |
7.9 | 4.4 | 3.6 | 1.3 | 4.4 | |||||||||||||||
Interest expense |
(0.6 | ) | (0.4 | ) | (0.9 | ) | (0.3 | ) | 0.2 | |||||||||||
Foreign currency loss, net |
(4.8 | ) | (2.7 | ) | (20.5 | ) | (7.4 | ) | 15.7 | |||||||||||
Others, net |
0.1 | 0.0 | 0.6 | 0.2 | (0.5 | ) | ||||||||||||||
2.6 | 1.4 | (17.2 | ) | (6.2 | ) | 19.8 | ||||||||||||||
Loss before income tax expense |
(39.2 | ) | (21.8 | ) | (12.4 | ) | 4.5 | (26.8 | ) | |||||||||||
Income tax benefit |
(8.6 | ) | (4.8 | ) | (1.4 | ) | (0.5 | ) | (7.2 | ) | ||||||||||
Net loss |
$ | (30.6 | ) | (17.1 | ) | $ | (11.0 | ) | (4.0 | ) | $ | (19.6 | ) | |||||||
Nine Months Ended September 30, 2023 |
Nine Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Total Revenues |
Amount |
% of Total Revenues |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
Net sales – standard products business |
||||||||||||||||||||
Display Solutions |
$ | 26.9 | 15.0 | % | $ | 63.9 | 23.1 | % | $ | (37.0 | ) | |||||||||
Power Solutions |
127.6 | 71.2 | 184.2 | 66.6 | (56.6 | ) | ||||||||||||||
Total standard products business |
154.5 | 86.2 | 248.1 | 89.7 | (93.6 | ) | ||||||||||||||
Net sales – transitional Fab 3 foundry services |
24.7 | 13.8 | 28.6 | 10.3 | (3.9 | ) | ||||||||||||||
Total revenues |
$ | 179.2 | 100.0 | % | $ | 276.7 | 100.0 | % | $ | (97.4 | ) | |||||||||
Nine Months Ended September 30, 2023 |
Nine Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Net Sales |
Amount |
% of Net Sales |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Gross Profit |
||||||||||||||||||||
Gross profit – standard products business |
$ | 42.5 | 27.5 | % | $ | 82.9 | 33.4 | % | $ | (40.4 | ) | |||||||||
Gross profit – transitional Fab 3 foundry services |
(2.4 | ) | (9.7 | ) | 2.3 | 8.0 | (4.7 | ) | ||||||||||||
Total gross profit |
$ | 40.1 | 22.4 | % | $ | 85.2 | 30.8 | % | $ | (45.1 | ) | |||||||||
Nine Months Ended September 30, 2023 |
Nine Months Ended September 30, 2022 |
|||||||||||||||||||
Amount |
% of Net Sales – standard products business |
Amount |
% of Net Sales – standard products business |
Change Amount |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||||||
Korea |
$ | 50.1 | 32.5 | % | $ | 86.1 | 34.7 | % | $ | (35.9 | ) | |||||||||
Asia Pacific (other than Korea) |
96.8 | 62.6 | 148.9 | 60.0 | (52.2 | ) | ||||||||||||||
United States |
2.5 | 1.6 | 8.1 | 3.3 | (5.6 | ) | ||||||||||||||
Europe |
5.1 | 3.3 | 5.0 | 2.0 | 0.1 | |||||||||||||||
$ | 154.5 | 100.0 | % | $ | 248.1 | 100.0 | % | $ | (93.6 | ) | ||||||||||
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
Item 4. |
Controls and Procedures |
Item 1. |
Legal Proceedings |
Item 1A. |
Risk Factors |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |
Approximate dollar value of Shares that may yet be Purchased under the Plans or Programs (in thousands)(1) |
||||||||||||
July 2023 |
— |
— |
— |
— |
||||||||||||
August 2023 |
144,294 |
$ |
8.17 |
144,294 |
$ |
48,821 |
||||||||||
September 2023 |
527,204 |
$ |
7.93 |
527,204 |
$ |
44,638 |
||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
671,498 |
$ |
7.98 |
671,498 |
$ |
44,638 |
||||||||||
|
|
|
|
|
|
|
|
(1) |
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. |
Item 3. |
Defaults Upon Senior Securities |
Item 4. |
Mine Safety Disclosures |
Item 5. |
Other Information |
Item 6. |
Exhibits. |
# |
Filed herewith |
† | Furnished herewith |
MAGNACHIP SEMICONDUCTOR CORPORATION (Registrant) | ||||||
Dated: November 8, 2023 | By: | /s/ Young-Joon Kim | ||||
Young-Joon Kim | ||||||
Chief Executive Officer (Principal Executive Officer) | ||||||
Dated: November 8, 2023 | By: | /s/ Shin Young Park | ||||
Shin Young Park | ||||||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
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 quarterly report on Form 10-Q 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting.
Dated: November 8, 2023 |
/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 quarterly report on Form 10-Q 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting.
Dated: November 8, 2023 |
/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 officers knowledge, that:
(i) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 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: November 8, 2023 | /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 officers knowledge, that:
(i) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 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: November 8, 2023 | /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.
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 56,655,377 | 56,432,449 |
Common stock, shares outstanding | 39,667,995 | 43,824,575 |
Treasury stock, shares | 16,987,382 | 12,607,874 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Revenues: | ||||
Net sales | $ 61,245 | $ 71,199 | $ 179,229 | $ 276,668 |
Cost of sales: | ||||
Cost of sales | 46,764 | 53,974 | 139,116 | 191,502 |
Gross profit | 14,481 | 17,225 | 40,113 | 85,166 |
Operating expenses: | ||||
Selling, general and administrative expenses | 12,089 | 11,411 | 36,391 | 38,310 |
Research and development expenses | 11,627 | 13,321 | 36,180 | 38,685 |
Early termination and other charges, net | 0 | 2,501 | 9,251 | 3,298 |
Total operating expenses | 23,716 | 27,233 | 81,822 | 80,293 |
Operating income (loss) | (9,235) | (10,008) | (41,709) | 4,873 |
Interest income | 2,382 | 1,784 | 7,916 | 3,560 |
Interest expense | (189) | (278) | (645) | (888) |
Foreign currency loss, net | (2,583) | (12,809) | (4,776) | (20,511) |
Other income, net | 87 | 174 | 55 | 603 |
Loss before income tax expense | (9,538) | (21,137) | (39,159) | (12,363) |
Income tax benefit | (4,373) | (3,942) | (8,577) | (1,356) |
Net loss | $ (5,165) | $ (17,195) | $ (30,582) | $ (11,007) |
Basic loss per common share— | $ (0.13) | $ (0.38) | $ (0.73) | $ (0.24) |
Diluted loss per common share— | $ (0.13) | $ (0.38) | $ (0.73) | $ (0.24) |
Weighted average number of shares— | ||||
Basic | 40,145,290 | 44,865,266 | 41,747,255 | 45,119,214 |
Diluted | 40,145,290 | 44,865,266 | 41,747,255 | 45,119,214 |
Standard products business [Member] | ||||
Revenues: | ||||
Net sales | $ 51,619 | $ 62,771 | $ 154,508 | $ 248,069 |
Cost of sales: | ||||
Cost of sales | 36,829 | 45,497 | 112,008 | 165,197 |
Gross profit | 14,790 | 17,274 | 42,500 | 82,872 |
Fab 3 Foundry Services [Member] | ||||
Revenues: | ||||
Net sales | 9,626 | 8,428 | 24,721 | 28,599 |
Cost of sales: | ||||
Cost of sales | 9,935 | 8,477 | 27,108 | 26,305 |
Gross profit | $ (309) | $ (49) | $ (2,387) | $ 2,294 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (5,165) | $ (17,195) | $ (30,582) | $ (11,007) |
Other comprehensive loss | ||||
Foreign currency translation adjustments | (1,847) | (5,974) | (6,040) | (15,881) |
Derivative adjustments | ||||
Fair valuation of derivatives | (1,013) | (11,757) | (2,523) | (19,498) |
Reclassification adjustment for loss on derivatives included in net loss | 698 | 2,820 | 2,544 | 5,378 |
Total other comprehensive loss | (2,162) | (14,911) | (6,019) | (30,001) |
Total comprehensive loss | $ (7,327) | $ (32,106) | $ (36,601) | $ (41,008) |
Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (5,165) | $ (17,195) | $ (30,582) | $ (11,007) |
Insider Trading Arrangements |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Business, Basis of Presentation and Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Business, Basis of Presentation and Significant Accounting Policies | 1. Business, Basis of Presentation and Significant Accounting Policies Business Magnachip Semiconductor Corporation (together with its subsidiaries, the “Company”) is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, Internet of Things (“IoT”) applications, consumer, computing, industrial and automotive applications. The Company’s standard products business includes its Display Solutions and Power Solutions business lines. The Company’s Display Solutions products provide panel display solutions to major suppliers of large and small rigid and flexible panel displays, and a wide range of applications including smartphones, TVs, automotive and IT applications such as monitors, notebook PCs, tablet PCs as well as AR/VRs. The Company’s Power Solutions products include discrete and integrated circuit solutions for power management in communications, consumer, computing, servers, automotive, and industrial applications. On September 1, 2020, the Company completed the sale of the Company’s Foundry Services Group business and its fabrication facility located in Cheongju, Korea, known as “Fab 4”, to Key Foundry Co., Ltd., a Korean corporation (“Key Foundry”). Following the consummation of the sale, the Company provided Key Foundry with transitional foundry services associated with its fabrication facility located in Gumi, Korea, known as “Fab 3”, at an agreed upon cost plus mark-up (the “Transitional Fab 3 Foundry Services”). The contractual obligation to provide the Transitional Fab 3 Foundry Services ended August 31, 2023, and the Company is planning to wind down these foundry services and convert portions of the idle capacity to Power Solutions standard products beginning around the second half of 2024. Because these foundry services during the wind-down period are still provided to Key Foundry by the Company using its Fab 3 based on mutually agreed terms and conditions, the Company will continue to report its revenue from providing these foundry services and related cost of sales within the Transitional Fab 3 Foundry Services line in its consolidated statement of operations until such wind down is completed. Basis of Presentation The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). These interim consolidated financial statements include normal recurring adjustments and the elimination of all intercompany accounts and transactions which are, in the opinion of management, necessary to provide a fair statement of the Company’s financial condition and results of operations for the periods presented. These interim consolidated financial statements are presented in accordance with Accounting Standards Codification (“ASC”) 270, “Interim Reporting” and, accordingly, do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for a full year or for any other periods. The December 31, 2022 balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes to the Company’s significant accounting policies as of and for the nine months ended September 30, 2023 as compared to the significant accounting policies described in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2022. |
Inventories |
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Inventories | 2. Inventories Inventories as of September 30, 2023 and December 31, 2022 consist of the following (in thousands):
Changes in inventory reserve for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):
Inventory reserve represents the Company’s best estimate in value lost due to excessive inventory level, physical deterioration, obsolescence, changes in price levels, or other causes based on individual facts and circumstances. Inventory reserve relates to inventory items including finished goods, semi-finished goods,
work-in-process |
Property, Plant and Equipment |
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Property, Plant and Equipment | 3. Property, Plant and Equipment Property, plant and equipment as of September 30, 2023 and December 31, 2022 are comprised of the following (in thousands):
Aggregate depreciation expenses totaled $12,111 thousand and $10,699 thousand for the nine months ended September 30, 2023 and 2022, respectively.
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | 4. Intangible Assets Intangible assets as of September 30, 2023 and December 31, 2022 are comprised of the following (in thousands):
Aggregate amortization expenses for intangible assets totaled $472 thousand and $526 thousand for the nine months ended September 30, 2023 and 2022, respectively.
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Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | 5. Accrued Expenses Accrued expenses as of September 30, 2023 and December 31, 2022 are comprised of the following (in thousands):
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | 6. Derivative Financial Instruments The Company’s Korean subsidiary from time to time has entered into zero cost collar contracts to hedge the risk of changes in the functional-currency-equivalent cash flows attributable to currency rate changes on U.S. dollar denominated revenues. Details of the zero cost collar contracts as of September 30, 2023 are as follows (in thousands):
Details of the zero cost collar contracts as of December 31, 2022 are as follows (in thousands):
The zero cost collar contracts qualify as cash flow hedges under ASC 815, “Derivatives and Hedging,” since at both the inception of the contracts and on an ongoing basis, the hedging relationship was and is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk during the term of the contracts. The fair values of the Company’s outstanding zero cost collar contracts recorded as liabilities as of September 30, 2023 and December 31, 2022 are as follows (in thousands):
Offsetting of derivative liabilities as of September 30, 2023 is as follows (in thousands):
Offsetting of derivative liabilities as of December 31, 2022 is as follows (in thousands):
For derivative instruments that are designated and qualify as cash flow hedges, gains or losses on the derivative aside from components excluded from the assessment of effectiveness are reported as a component of accumulated other comprehensive income or loss (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative, representing hedge components excluded from the assessment of effectiveness, are recognized in current earnings. The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the three months ended September 30, 2023 and 2022 (in thousands):
The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the nine months ended September 30, 2023 and 2022 (in thousands):
As of September 30, 2023, the amount expected to be reclassified from accumulated other comprehensive loss into loss within the next 12 months is $1,204 thousand. The Company set aside cash deposit to the counterparty, Standard Chartered Bank Korea Limited (“SC”), as required for the zero cost collar contracts. This cash deposit is recorded as hedge collateral on the consolidated balance sheets. Cash deposits as of September 30, 2023 and December 31, 2022 are as follows (in thousands):
The Company is required to deposit additional cash collateral with Nomura Financial Investment (Korea) Co., Ltd. (“NFIK”) and SC for any exposure in excess of $500 thousand. As of September 30, 2023, $1,680 thousand of additional cash collateral was required by NFIK, and recorded as hedge collateral on the consolidated balance sheet. As of December 31, 2022, $1,840 thousand and $100 thousand of additional cash collateral were required by NFIK and SC, respectively, and recorded as hedge collateral on the consolidated balance sheet. These zero cost collar contracts may be terminated by the counterparties if the Company’s total cash and cash equivalents is less than $30,000 thousand at the end of a fiscal quarter, unless a waiver is obtained.
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Fair Value Measurements |
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Fair Value Measurements | 7. Fair Value Measurements Fair Value of Financial Instruments As of September 30, 2023, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):
As of December 31, 2022, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):
Items not reflected in the table above include cash equivalents, accounts receivable, other receivables, accounts payable, and other accounts payable, fair value of which approximate carrying values due to the short-term nature of these instruments. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs.
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Accrued Severance Benefits |
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Accrued Severance Benefits | 8. Accrued Severance Benefits The majority of accrued severance benefits are for employees in the Company’s Korean subsidiary. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees and executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of September 30, 2023, 97% of all employees of the Company were eligible for severance benefits. Changes in accrued severance benefits are as follows (in thousands):
The severance benefits funded through the Company’s National Pension Fund and group severance insurance plan will be used exclusively for payment of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance. Beginning in July 2018, the Company contributes to certain severance insurance deposit accounts a certain percentage of severance benefits that are accrued for eligible employees for their services from January 1, 2018 pursuant to Employee Retirement Benefit Security Act of Korea. These accounts consist of time deposits and other guaranteed principal and interest, and are maintained at insurance companies, banks or security companies for the benefit of employees. The Company deducts the contributions made to these severance insurance deposit accounts from its accrued severance benefits. The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age (in thousands):
The above amounts were determined based on the non-executive employees’ current salary rates and the number of service years that will be accumulated upon their retirement dates. These amounts do not include amounts that might be paid to non-executive employees that will cease working with the Company before their normal retirement ages. Korea’s mandatory retirement age is 60 years of age or older under the Employment Promotion for the Aged Act. The Company sets the retirement age of employees at 60.
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Early Termination and Other Charges |
9 Months Ended |
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Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Early Termination and Other Charges | 9. Early Termination and Other Charges During the first quarter of 2023, the Company commenced the voluntary resignation program (the “2023 Voluntary Resignation Program”), which was available for the employees with more than 20 years of service. For the nine months ended September 30, 2023, the Company recorded in its consolidated statement of operations $8,449 thousand of termination related charges as “early termination and other charges”, which were paid during the second quarter of 2023. For the nine months ended September 30, 2023, the Company also recorded $802 thousand of one-time employee incentives, which were paid during the third quarter of 2023. For the three and nine months ended September 30, 2022, the Company recorded $2,821 thousand of
one-time employee incentives, in each period, and professional service fees and expenses of $217 thousand and $1,014 thousand, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $537 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. |
Foreign Currency Loss, Net |
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Sep. 30, 2023 | |
Foreign Currency [Abstract] | |
Foreign Currency Loss, Net | 10. Foreign Currency Loss, Net Net foreign currency gain or loss includes
non-cash translation gain or loss associated with intercompany balances. A substantial portion of the Company’s net foreign currency gain or loss is non-cash translation gain or loss associated with intercompany long-term loans to the Company’s Korean subsidiary. The loans are denominated in U.S. dollars and are affected by changes in the exchange rate between the Korean won and the U.S. dollar. As of September 30, 2023 and December 31, 2022, the outstanding intercompany loan balances including accrued interest between the Korean subsidiary and the Dutch subsidiary were $281,685 thousand and $310,988 thousand, respectively. The Korean won to U.S. dollar exchange rates were 1,344.8:1 and 1,267.3:1 using the first base rate as of September 30, 2023 and December 31, 2022, respectively, as quoted by the KEB Hana Bank. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The Company and its subsidiaries file income tax returns in Korea, Japan, Taiwan, the U.S. and in various other jurisdictions. The Company is subject to income or non-income tax examinations by tax authorities of these jurisdictions for all open tax years. For the three and nine months ended September 30, 2023, the Company recorded an income tax benefit of $4,373 thousand and $8,577 thousand, respectively, primarily related to its primary operating entity in Korea based on the estimated taxable loss for the respective period. For the three and nine months ended September 30, 2022, the Company recorded an income tax benefit of $3,942 thousand and $1,356 thousand, respectively, primarily attributable to a decrease in its Korean subsidiary’s
pre-tax income for the respective period due to the foreign currency translation loss recorded in its Korean subsidiary in connection with intercompany loans. |
Geographic and Other Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic and Other Information | 12. Geographic and Other Information The following sets forth information relating to the single operating segment (in thousands):
The following is a summary of net sales—standard products business (which does not include the Transitional Fab 3 Foundry Services) by geographic region, based on the location to which the products are billed (in thousands):
For the three months ended September 30, 2023 and 2022, of the Company’s net sales – standard products business in Asia Pacific (other than Korea), net sales – standard products business in China and Hong Kong together represented 73.3% and 74.2%, respectively. For the nine months ended September 30, 2023 and 2022, of the Company’s net sales – standard products business in Asia Pacific (other than Korea), net sales – standard products business in China and Hong Kong represented 66.1% and 66.4%, respectively. Net sales from the Company’s top ten largest customers in the standard products business (which does not include the Transitional Fab 3 Foundry Services) accounted for 74% and 64% for the three months ended September 30, 2023 and 2022, respectively, and 70% for the nine months ended September 30, 2023 and 2022, in each period. For the three months ended September 30, 2023, the Company had one customer that represented 18.8% of its net sales—standard products business. For the nine months ended September 30, 2023, the Company had two customers that represented 15.9% and 13.3% of its net sales—standard products business, respectively. For the three months ended September 30, 2022, the Company had one customer that represented 16.2% of its net sales – standard products business. For the nine months ended September 30, 2022, the Company had two customers that represented 20.6% and 13.9% of its net sales – standard products business. As of September 30, 2023, two customers of the Company’s standard products business accounted for 30.6% and 10.4% of its accounts receivable –standard products business (which does not include the Transitional Fab 3 Foundry Services), respectively. As of December 31, 2022, two customers of the Company’s standard products business accounted for 25.1% and 15.2% of its accounts receivable – standard products business (which does not include the Transitional Fab 3 Foundry Services), respectively.
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | 13. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consists of the following as of September 30, 2023 and December 31, 2022, respectively (in thousands):
Changes in accumulated other comprehensive loss for the three months ended September 30, 2023 and 2022 are as follows (in thousands):
Changes in accumulated other comprehensive loss for the nine months ended September 30, 2023 and 2022 are as follows (in thousands):
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Stock Repurchases |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Stock Repurchases | 14. Stock Repurchases Accelerated Stock Repurchase Program On December 21, 2021, the Board of Directors authorized the Company to repurchase up to $75 million of its outstanding common stock and the Company entered into an accelerated stock repurchase agreement dated December 21, 2021 (the “ASR Agreement”) with JPMorgan Chase Bank, National Association (“JPM”) to repurchase an aggregate of $37.5 mi of its common stock. lli onPursuant to the terms of the ASR Agreement, the Company paid to JPM $37.5 million in cash and received an initial delivery of 994,695 shares of its common stock in the open market for an aggregate purchase price of $20.1 million and a price per share of $20.18 on December 22, 2021. As of December 31, 2021, the Company accounted for the remaining portion of the ASR Agreement as a forward contract indexed to its own common stock and recorded $17.4 million in additional paid-in capital in stockholders’ equity in its consolidated balance sheets. In March 2022, the previously announced repurchase of $37.5 million of the Company’s common stock was completed pursuant to the ASR Agreement, and as a result, the Company additionally received 1,031,576 shares of its common stock for an aggregate purchase price of $17.2 million at a price per share of $16.69, which was reclassified as treasury stock from additional paid-in capital in stockholder’s equity in its consolidated balance sheets.Expanded Stock Repurchase Program On August 31, 2022, the Board of Directors authorized an expansion of the Company’s previously announced stock repurchase program from $75 million to $87.5 million of its common stock. The remaining $50 million of the expanded $87.5 million program was expected to be repurchased in the open market or through privately negotiated transactions. In June 2023, the Company completed the repurchase of its common stock under its expanded stock repurchase program using the remaining $50 million through open market purchases. From September 2022 to December 2022, the Company repurchased 1,235,650 shares of its common stock in the open market for an aggregate purchase price of $12.5 million and a weighted average During the first half of 2023, the Company repurchased 3,705,443 shares of its common stock in the open market for an aggregate purchase price of $37.4 million and a weighted average New Stock Repurchase Program On July 19, 2023, the 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. From August 2023 to September 2023, the Company repurchased 671,498 shares of its common stock in the open market for an aggregate purchase price of $5.4 m i l l i o n weighted average program. In October 2023, the Company repurchased 904,977 shares of its common stock in the open market for an aggregate purchase price of $7.0 million and a weighted average price per share of $7.78 under the new stock repurchase program. |
Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share | 15. Loss Per Share The following table illustrates the computation of basic and diluted loss per common share for the three and nine months ended September 30, 2023 and 2022:
Diluted loss per share adjusts basic loss per share for the potentially dilutive impact of stock options and restricted stock units. As the Company has reported loss for the three and nine months ended September 30, 2023 and September 30, 2022, all potentially dilutive securities are anti-dilutive and accordingly not considered, therefore basic net loss per share equals diluted net loss per share. The following outstanding instruments were excluded from the computation of diluted loss per share, as they have an anti-dilutive effect on the calculation:
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies Advances to Suppliers The Company, from time to time, may make advances in form of prepayments or deposits to suppliers, including external foundries, to meet its planned production. The Company recorded advances of $3,907 thousand and $6,605 thousand as other current assets as of September 30, 2023 and December 31, 2022, respectively.
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Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Business | Business Magnachip Semiconductor Corporation (together with its subsidiaries, the “Company”) is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, Internet of Things (“IoT”) applications, consumer, computing, industrial and automotive applications. The Company’s standard products business includes its Display Solutions and Power Solutions business lines. The Company’s Display Solutions products provide panel display solutions to major suppliers of large and small rigid and flexible panel displays, and a wide range of applications including smartphones, TVs, automotive and IT applications such as monitors, notebook PCs, tablet PCs as well as AR/VRs. The Company’s Power Solutions products include discrete and integrated circuit solutions for power management in communications, consumer, computing, servers, automotive, and industrial applications. On September 1, 2020, the Company completed the sale of the Company’s Foundry Services Group business and its fabrication facility located in Cheongju, Korea, known as “Fab 4”, to Key Foundry Co., Ltd., a Korean corporation (“Key Foundry”). Following the consummation of the sale, the Company provided Key Foundry with transitional foundry services associated with its fabrication facility located in Gumi, Korea, known as “Fab 3”, at an agreed upon cost plus mark-up (the “Transitional Fab 3 Foundry Services”). The contractual obligation to provide the Transitional Fab 3 Foundry Services ended August 31, 2023, and the Company is planning to wind down these foundry services and convert portions of the idle capacity to Power Solutions standard products beginning around the second half of 2024. Because these foundry services during the wind-down period are still provided to Key Foundry by the Company using its Fab 3 based on mutually agreed terms and conditions, the Company will continue to report its revenue from providing these foundry services and related cost of sales within the Transitional Fab 3 Foundry Services line in its consolidated statement of operations until such wind down is completed. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). These interim consolidated financial statements include normal recurring adjustments and the elimination of all intercompany accounts and transactions which are, in the opinion of management, necessary to provide a fair statement of the Company’s financial condition and results of operations for the periods presented. These interim consolidated financial statements are presented in accordance with Accounting Standards Codification (“ASC”) 270, “Interim Reporting” and, accordingly, do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for a full year or for any other periods. The December 31, 2022 balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes to the Company’s significant accounting policies as of and for the nine months ended September 30, 2023 as compared to the significant accounting policies described in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2022. |
Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories | Inventories as of September 30, 2023 and December 31, 2022 consist of the following (in thousands):
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Changes in Inventory Reserve | Changes in inventory reserve for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):
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Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property, Plant and Equipment | Property, plant and equipment as of September 30, 2023 and December 31, 2022 are comprised of the following (in thousands):
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Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets | Intangible assets as of September 30, 2023 and December 31, 2022 are comprised of the following (in thousands):
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Accrued Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Expenses | Accrued expenses as of September 30, 2023 and December 31, 2022 are comprised of the following (in thousands):
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Derivative Contracts | Details of the zero cost collar contracts as of September 30, 2023 are as follows (in thousands):
Details of the zero cost collar contracts as of December 31, 2022 are as follows (in thousands):
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Fair Values of Outstanding Zero Cost Collar and Forward Contracts Recorded as Assets and Liabilities | The fair values of the Company’s outstanding zero cost collar contracts recorded as liabilities as of September 30, 2023 and December 31, 2022 are as follows (in thousands):
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Offsetting of Derivative Liabilities | Offsetting of derivative liabilities as of September 30, 2023 is as follows (in thousands):
Offsetting of derivative liabilities as of December 31, 2022 is as follows (in thousands):
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Impact of Derivative Instruments on Consolidated Statement of Operations | The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the three months ended September 30, 2023 and 2022 (in thousands):
The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the nine months ended September 30, 2023 and 2022 (in thousands):
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Summary Of Cash Deposits | This cash deposit is recorded as hedge collateral on the consolidated balance sheets. Cash deposits as of September 30, 2023 and December 31, 2022 are as follows (in thousands):
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | As of September 30, 2023, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):
As of December 31, 2022, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):
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Accrued Severance Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Postemployment Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accrued Severance Benefits | Changes in accrued severance benefits are as follows (in thousands):
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Future Benefits Payments to Employees | The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age (in thousands):
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Geographic and Other Information (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Segments | The following sets forth information relating to the single operating segment (in thousands):
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales by Region, Based on Location of Products are Billed | The following is a summary of net sales—standard products business (which does not include the Transitional Fab 3 Foundry Services) by geographic region, based on the location to which the products are billed (in thousands):
|
Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss consists of the following as of September 30, 2023 and December 31, 2022, respectively (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss for the three months ended September 30, 2023 and 2022 are as follows (in thousands):
Changes in accumulated other comprehensive loss for the nine months ended September 30, 2023 and 2022 are as follows (in thousands):
|
Loss Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Loss Per Common Share | The following table illustrates the computation of basic and diluted loss per common share for the three and nine months ended September 30, 2023 and 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from The Computation of Loss Per Common Share | The following outstanding instruments were excluded from the computation of diluted loss per share, as they have an anti-dilutive effect on the calculation:
|
Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|---|---|
Inventory Disclosure [Abstract] | ||||||
Finished goods | $ 5,555 | $ 6,799 | ||||
Semi-finished goods and work-in-process | 35,684 | 40,265 | ||||
Raw materials | 5,666 | 7,460 | ||||
Materials in-transit | 10 | 36 | ||||
Less: inventory reserve | (16,079) | $ (14,745) | (14,677) | $ (11,538) | $ (10,206) | $ (5,730) |
Inventories, net | $ 30,836 | $ 39,883 |
Inventories - Changes in Inventory Reserve (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Changes In Inventory Reserve [Abstract] | ||||
Beginning balance | $ (14,745) | $ (10,206) | $ (14,677) | $ (5,730) |
Change in reserve [Abstract] | ||||
Inventory reserve charged to costs of sales | (2,759) | (3,199) | (7,366) | (10,899) |
Sale of previously reserved inventory | 845 | 672 | 4,368 | 2,996 |
Change in reserve | (1,914) | (2,527) | (2,998) | (7,903) |
Write off | 187 | 16 | 669 | 311 |
Translation adjustments | 393 | 1,179 | 927 | 1,784 |
Ending balance | $ (16,079) | $ (11,538) | $ (16,079) | $ (11,538) |
Property, Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Property, Plant and Equipment [Line Items] | ||
Depreciation expenses | $ 12,111 | $ 10,699 |
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Detail) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 189,370 | $ 196,725 |
Less: accumulated depreciation | (107,235) | (101,502) |
Land | 12,283 | 13,034 |
Construction in progress | 1,723 | 2,490 |
Property, plant and equipment, net | 96,141 | 110,747 |
Buildings and Related Structures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 23,501 | 24,780 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 131,892 | 137,666 |
Finance Lease Right-of-Use Assets [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 685 | 389 |
Others [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 33,292 | $ 33,890 |
Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense for intangible assets | $ 472 | $ 526 |
Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross amount | $ 8,786 | $ 9,111 |
Accumulated amortization | (7,203) | (7,181) |
Net amount | 1,583 | 1,930 |
Intellectual Property Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amount | 8,786 | 9,111 |
Accumulated amortization | (7,203) | (7,181) |
Net amount | $ 1,583 | $ 1,930 |
Accrued Expenses - Summary of Accrued Expenses (Detail) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Payroll, benefits and related taxes, excluding severance benefits | $ 6,263 | $ 7,620 |
Withholding tax attributable to intercompany interest income | 1,287 | 43 |
Outside service fees | 1,308 | 1,642 |
Others | 810 | 383 |
Accrued expenses | $ 9,668 | $ 9,688 |
Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Derivative [Line Items] | ||
Estimated amount reclassified from accumulated other comprehensive income into income | $ 1,204 | |
Zero Cost Collar and Forward Contracts [Member] | Nomura Financial Investment (Korea) Co., Ltd. [Member] | ||
Derivative [Line Items] | ||
Threshold amount of cash collateral | 500 | |
Cash collateral for credit exposure in derivatives | 1,680 | $ 1,840 |
Termination provisions for cash and cash equivalents | $ 30,000 | |
Zero Cost Collar and Forward Contracts [Member] | Standard Chartered Bank Korea Limited [Member] | ||
Derivative [Line Items] | ||
Cash collateral for credit exposure in derivatives | $ 100 |
Derivative Financial Instruments - Fair Values of Outstanding Zero Cost Collar and Forward Contracts Recorded as Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Liability Derivatives: | ||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | |
Zero Cost Collars [Member] | ||
Liability Derivatives: | ||
Other current liabilities | $ 2,104 | $ 2,015 |
Derivative Financial Instruments - Offsetting of Derivative Assets and Liabilities (Detail) - Zero Cost Collars [Member] - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Liability Derivatives: | ||
Gross amounts of recognized liabilities | $ 2,104 | $ 2,015 |
Gross amounts offset in the balance sheets | 0 | 0 |
Net amounts of liabilities presented in the balance sheets | 2,104 | 2,015 |
Gross amounts not offset in the balance sheets, Financial instruments | 0 | 0 |
Gross amounts not offset in the balance sheets, Cash collateral pledged | (1,680) | (1,940) |
Net amount | $ 424 | $ 75 |
Derivative Financial Instruments - Cash deposits (Detail) - Zero Cost Collar And Forward Contracts [Member] - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deposit Assets [Line Items] | ||
Deposit with counterparty | $ 1,000 | $ 1,000 |
SC [Member] | ||
Deposit Assets [Line Items] | ||
Deposit with counterparty | $ 1,000 | $ 1,000 |
Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - Other Current Liabilities [Member] - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Value [Member] | ||
Liabilities: | ||
Derivative liabilities | $ 2,104 | $ 2,015 |
Estimate of Fair Value Measurement [Member] | ||
Liabilities: | ||
Derivative liabilities | 2,104 | 2,015 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Liabilities: | ||
Derivative liabilities | $ 2,104 | $ 2,015 |
Accrued Severance Benefits - Additional Information (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Percentage of employees eligible for severance benefits | 97.00% |
Retirement age of employees | 60 years |
Korea [Member] | Minimum [Member] | |
Korea's mandatory retirement age | 60 years |
Accrued Severance Benefits - Changes in Accrued Severance Benefits (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Postemployment Benefits [Abstract] | |||||
Beginning balance | $ 45,121 | $ 47,586 | $ 48,496 | $ 51,567 | |
Provisions | 1,267 | 1,923 | 5,358 | 5,163 | |
Severance payments | (455) | (1,247) | (6,183) | (4,181) | |
Translation adjustments | (1,092) | (4,730) | (2,830) | (9,017) | |
Ending balance | 44,841 | 43,532 | 44,841 | 43,532 | |
Less: Cumulative contributions to severance insurance deposit accounts | (24,503) | (15,292) | (24,503) | (15,292) | |
The National Pension Fund | (29) | (40) | (29) | (40) | |
Group severance insurance plan | (149) | (164) | (149) | (164) | |
Accrued severance benefits, net | $ 20,160 | $ 28,036 | $ 20,160 | $ 28,036 | $ 23,121 |
Accrued Severance Benefits - Future Benefits Payments to Employees (Detail) $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Postemployment Benefits [Abstract] | |
Remainder of 2023 | $ 163 |
2024 | 310 |
2025 | 577 |
2026 | 647 |
2027 | 362 |
2028 | 3,352 |
2029 - 2033 | $ 17,648 |
Early Termination and Other Charges - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Restructuring Cost and Reserve [Line Items] | |||
Minimum requisite period of service for voluntary resignation program | 20 years | ||
Early termination charges | $ 8,449 | ||
One time employee incentives and professional service fees and expenses | $ 2,821 | $ 802 | $ 2,821 |
Professional fees | 217 | 1,014 | |
Gain loss on disposition of property plant equipment | $ 537 | $ 537 |
Foreign Currency Loss, Net - Additional Information (Detail) $ in Thousands |
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Foreign Currency Transaction [Abstract] | ||
Exchange rates using first base rate | 1,344.8 | 1,267.3 |
Intercompany loan balances | $ 281,685 | $ 310,988 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Tax Contingency [Line Items] | ||||
Income tax expense (benefit) | $ (4,373) | $ (3,942) | $ (8,577) | $ (1,356) |
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Equity [Abstract] | ||
Foreign currency translation adjustments | $ (17,368) | $ (11,328) |
Derivative adjustments | (1,204) | (1,225) |
Total | $ (18,572) | $ (12,553) |
Loss Per Share - Schedule of Computation of Basic and Diluted Loss Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Basic loss per share | ||||
Net loss | $ (5,165) | $ (17,195) | $ (30,582) | $ (11,007) |
Basic weighted average common stock outstanding (in shares) | 40,145,290 | 44,865,266 | 41,747,255 | 45,119,214 |
Basic loss per share (in dollars per share) | $ (0.13) | $ (0.38) | $ (0.73) | $ (0.24) |
Diluted loss per share | ||||
Basic weighted average common stock outstanding (in shares) | 40,145,290 | 44,865,266 | 41,747,255 | 45,119,214 |
Net effect of dilutive equity awards (in shares) | 0 | 0 | 0 | 0 |
Diluted weighted average common stock outstanding (in shares) | 40,145,290 | 44,865,266 | 41,747,255 | 45,119,214 |
Diluted loss per share (in dollars per share) | $ (0.13) | $ (0.38) | $ (0.73) | $ (0.24) |
Loss Per Share - Schedule of Antidilutive Securities Excluded from the Computation of Loss Per Common Share (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding units and warrants excluded from computation of diluted earnings (loss) per share/unit (in shares) | 902,858 | 1,141,551 | 902,858 | 1,141,551 |
Restricted Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding units and warrants excluded from computation of diluted earnings (loss) per share/unit (in shares) | 1,321,794 | 1,014,124 | 1,321,794 | 1,014,124 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Payments to Suppliers and Employees [Abstract] | ||
Prepayments to suppliers | $ 3,907 | $ 6,605 |
1 Year Magnachip Semiconductor Chart |
1 Month Magnachip Semiconductor Chart |
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