DB HiTek calls off plan to separate chip design division

DB HiTek, a local semiconductor company, called off its plan to separate its chip design division in the face of shareholder backlash.

“We had been considering many strategies, including separating the designing business, to strengthen our expertise in each business sector and to enhance competitiveness, but decided to discontinue the ongoing discussion on the separation plan,” the company said in an electronic disclosure Tuesday, two months after the possibility of the separation was first reported by local media.

The Bucheon, Gyeonggi-based chip company has been considering separating its chip designing division in order to focus on the foundry business while enhancing its expertise in chip designing with the new company, yet met with strong opposition from its shareholders.

On July 12, DB HiTek admitted in an electronic disclosure that it is “currently considering many strategic moves including company separation […] though details such as separation method and schedule haven’t been decided.”

Shareholders immediately pushed back, citing damage to shareholder value that would be caused by the possible split-off. Kospi-listed DB HiTek’s share price fell 15.7 percent to 40,800 won ($29) that day.

DB HiTek's share price closed at 40,050 won on Tuesday, up 5.53 percent from the previous day, following the company’s decision announcement against the separation.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]