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South Korea's SK to buy silicon wafer maker LG Siltron

Expected growth in AI, 'internet of things' prompts purchase

SEOUL -- South Korea's SK Holdings will buy silicon wafer maker LG Siltron, the company said Monday, to strengthen its chipmaking business amid growing use of artificial intelligence and the "internet of things."

The SK Group holding company will pay 620 billion won ($531 million) to acquire 51% of Siltron's outstanding shares from LG Corp. this year. SK and LG signed agreements at their respective board meetings Monday.

Siltron is the only South Korean producer and seller of silicon wafers, a field led by Japanese and German makers. It holds the world's fourth-largest share for 300mm wafers, according to SK. The company recorded 777 billion won in sales and 5.4 billion won in operating profit in 2015.

SK Holdings is moving to vertically integrate its semiconductor business as the group eyes expansion in the fields of AI and the internet of things, which connects physical objects to the internet. About a year ago, SK Hynix bought OCI Materials, a producer of industrial gases such as nitrogen trifluoride, which is used in semiconductor production. Hynix plans to begin mass production of 72-layer NAND chips, the world's most advanced generation of flash memory, in the latter half of this year.

The Siltron purchase will "help strengthen competitiveness in the domestic semiconductor industry," SK said.

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