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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | 8. Derivative Financial Instruments The Company’s Korean subsidiary, Magnachip Semiconductor, Ltd., 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, 2025 are as follows (in thousands):
Date of transaction |  | Total notional amount |  |  | Month of settlement |
October 17, 2024 |  | $ | 9,000 |  |  |  | October 2025 to December 2025 |
February 03, 2025 |  | $ | 9,000 |  |  |  | January 2026 to March 2026 |
July 10, 2025 |  | $ | 9,000 |  |  |  | April 2026 to June 2026 |
July 17, 2025 |  | $ | 9,000 |  |  |  | July 2026 to September 2026 |
September 30, 2025 |  | $ | 27,000 |  |  |  | January 2026 to December 2026 |
Details of the zero cost collar contracts as of December 31, 2024 are as follows (in thousands):
Date of transaction |  | Total notional amount |  |  | Month of settlement |
April 05, 2024 |  | $ | 9,000 |  |  |  | January 2025 to March 2025 |
July 09, 2024 |  | $ | 18,000 |  |  |  | April 2025 to September 2025 |
October 17, 2024 |  | $ | 9,000 |  |  |  | October 2025 to December 2025 |
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 assets and liabilities as of September 30, 2025 and December 31, 2024 are as follows (in thousands):
Derivatives designated as hedging instruments: |  |  |  |  | September 30, 2025 |  |  | December 31, 2024 |
Assets Derivatives: |  |  |  |  |  |  |  |  |  |  |  |
Zero cost collars |  |  | Other current assets |  |  | $ | 79 |  |  | $ | — |
Liability Derivatives: |  |  |  |  |  |  |  |  |  |  |  |
Zero cost collars |  |  | Other current liabilities |  |  | $ | 693 |  |  | $ | 1,956 |
Zero cost collars |  |  | Other non-current liabilities |  |  | $ | 94 |  |  | $ | — |
Offsetting of derivative assets and liabilities as of September 30, 2025 is as follows (in thousands):
As of September 30, 2025 |  | Gross amounts of recognized assets/liabilities |  |  | Gross amounts offset in the balance sheets |  |  | Net amounts of assets/liabilities presented in the balance sheets |  |  | Gross amounts not offset in the balance sheets |  |  | Net amount |
| Financial instruments |  |  | Cash collateral pledged |
Assets Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zero cost collars |  | $ | 79 |  |  | $ | — |  |  | $ | 79 |  |  | $ | — |  |  | $ | — |  |  | $ | 79 |
Liability Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zero cost collars |  | $ | 787 |  |  | $ | — |  |  | $ | 787 |  |  | $ | — |  |  | $ | — |  |  | $ | 787 |
Offsetting of derivative liabilities as of December 31, 2024 is as follows (in thousands):
As of December 31, 2024 |  | 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 |  | $ | 1,956 |  |  | $ | — |  |  | $ | 1,956 |  |  | $ | — |  |  | $ | (1,080 | ) |  | $ | 876 |
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, 2025 and 2024 (in thousands):
Derivatives in ASC 815 Cash Flow Hedging Relationships |  | Amount of Gain (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, |
|  | 2025 |  |  | 2024 |  |  |  |  |  | 2025 |  |  | 2024 |  |  |  |  |  | 2025 |  |  | 2024 |
Zero cost collars |  | $ | (1,022 | ) |  | $ | 935 |  |  |  | Net sales |  |  | $ | — |  |  | $ | (118 | ) |  |  | Other income, net |  |  | $ | — |  |  | $ | (52 | )
|  | $ | (1,022 | ) |  | $ | 935 |  |  |  |  |  |  | $ | — |  |  | $ | (118 | ) |  |  |  |  |  | $ | — |  |  | $ | (52 | )
The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the nine months ended September 30, 2025 and 2024 (in thousands):
Derivatives in ASC 815 Cash Flow Hedging Relationships |  | Amount of Gain (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, |
|  | 2025 |  |  | 2024 |  |  |  |  |  | 2025 |  |  | 2024 |  |  |  |  |  | 2025 |  |  | 2024 |
Zero cost collars |  | $ | 731 |  |  | $ | (477 | ) |  |  | Net sales |  |  | $ | (604 | ) |  | $ | (704 | ) |  |  | Other income, net |  |  | $ | (51 | ) |  | $ | 58 |
|  | $ | 731 |  |  | $ | (477 | ) |  |  |  |  |  | $ | (604 | ) |  | $ | (704 | ) |  |  |  |  |  | $ | (51 | ) |  | $ | 58 |
As of September 30, 2025, the amount expected to be reclassified from accumulated other comprehensive income into earnings within the next 12 months is $369 thousand. The Company has set aside a 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, 2025 and December 31, 2024 are as follows (in thousands):
Counterparty |  | September 30, 2025 |  |  | December 31, 2024 |
SC |  | $ | — |  |  | $ | 1,000 |
Total |  | $ | — |  |  | $ | 1,000 |
The Company is required to deposit additional cash collateral with Nomura Financial Investment (Korea) Co., Ltd. (“NFIK”) for any exposure in excess of $500 thousand, but no such exposure existed as of September 30, 2025. As of December 31, 2024, $1,080 thousand of additional cash collateral were required by NFIK 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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