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I now will turn the call over to YJ Kim. YJ?

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Welcome to everyone on the Q4 conference call. We have a lot of ground to cover today, so let's get started. MagnaChip had a solid year in 2018, revenue of $750.9 million, increased 10.5% over 2017, despite uncertain macro factors, a general slowdown in China and on inventory correction by customers. The improvement in our revenue performance was especially notable considering that China accounted for more than 40% of our annual revenue for 2018, either through direct sales or indirect sales, through distributors and Korean OLED panel makers.

Our Standard Products Group turned in strong performance in 2018 with revenue of $425.4 million, up 18.4% over 2017 and up 29.3% on an adjusted basis. Both OLED and power had the record revenue in 2018 and are positioned for success in 2019, due to their strong product line ups and customer traction.

OLED revenue of $188 million in 2018 was on all-time high and was nearly triple the number of 2017 level. The $188 million in revenue, beat our previous record in 2016 by 17%. OLED display driver ICs accounted for 73.4% of the display revenue in 2018, up from 30.1% in 2017, which illustrates how we are improving the product mix within our display business.

We were awarded a record 41 new OLED design wins in 2018 from smartphone makers, primarily in China, but also in Korea that compared favorably with 29 OLED design wins in 2017. In a seasonally soft Q4, OLED revenue declined more than expected due to a slowdown in the smartphone market in China.

Our OLED business is off to a good start in 2019 and we currently expect Q1 '19 OLED revenue to be higher than Q4 '18 and 2019 OLED revenue is expected to be higher than 2018, driven by our strong product lineup and well-established traction with the world's top two OLED panel makers, that are co-located with us in Korea.

In Q4, we were awarded five new OLED design wins, including three from a major smartphone maker in Korea for mid-range smartphones, the first time in recent memory that we've cracked such mid-range phones in Korea. Our first 28 nanometer display driver is functional and ready for sampling this month and we anticipate volume production in the second half of this year.

We are confident that multiple smartphone makers will be drawn to its ultra low power specs and features, which are best in class. The 28 nanometer display drive IC is targeted at volume premium feature smartphones. As we look ahead to 2019 and beyond, we are beginning to see the emergence of new growth drivers to ignite growth in the smartphone market, four of our smartphones are expected to be showcased at Mobile World Congress this month, they all form (ph) exciting glimpse of what's around the corner. The rollout of the 5G and WiFi 6 also has the potential to drive smartphone upgrade cycles into high gear.

Turning now to power. The portfolio optimization initiatives we launched a few years ago in the power business paid up handsomely in 2018. Revenue of $169.3 million, set a record and increased 13% from 2017. Our current view is that power business will show a significant revenue growth in 2019 over 2018.

We don't break up our power profit margin, but we can point out that profit margin increased nearly 4 percentage points in 2018 over 2017, despite industrywide raw wafer price increases. The trajectory of the margin ramp has been steep over the past few years.

Our power business benefited in 2018 from an industry wide shortage, but our success also can be traced to the continuous growth in our portfolio of premium products. Revenue for higher margin premium products, which include IGBTs, Super Junction MOSFETs and Power ICs, increased 27.7% year-over-year and represented 44% of total power revenue in 2018.

Premium power products did particularly well in consumer and industrial markets. Our battery FET for smartphone batteries has the number one market share in Korea and we've design into next generation of phones in Korea.

Looking ahead, we see many opportunities to pair (ph) power products with OLED, DDICs in smartphones, and in many other devices. In Q4 2018, we were awarded five power discrete design wins for automotive application that we expect to go through full qualification in 2019. And we expect to begin production on these devices in 2020.

We anticipate that automotive will account for approximately 5% of our power discrete revenue in 2021 and 10% in 2022, due mainly to the sharp growth expected in the electrical -- electric vehicles market.

Bloomberg forecast that electric vehicles will grow worldwide from 1.1 million in 2017 to 11 million in 2025 and then surge to 30 million in 2030.

Turning now to foundry. Of the three businesses, foundry was impacted the most by an inventory correction and China slowdown. Foundry revenue in 2018 increased 1.6%, but declined 7.2% on an adjusted basis.

In Q4 '18, foundry revenue increased 3.1% from year ago, but declined 8% on an adjusted basis. Gross margin in Q4 '18 declined 8.5 percentage points from year ago or 7.2 percentage points on an adjusted basis.

We first pointed out foundry weakness on our Q3 earnings call last October and in again in our 10-Q last November. In that filing, we said we believed we were heading into a period of weaker demand from our foundry customers as a result of a recent softening in global market conditions. We added in the 10-Q that rising wafer and other costs lower than expected fab utilization and auto factors may adversely impact our foundry gross margin and other operating results, and we said that such an impact could potentially be material.

To respond to these issues, we said we were evaluating a number of options to optimize our foundry operations and expense structure with an intent toward maximizing shareholder value.

Today, we announced that we are undertaking a strategic evaluation of our foundry business and Fab 4, the larger of our two 8-inch analog and mixed signal fabs. Fab 4 accounts for approximately 73% of our total capacity, the great majority of the capacity in Fab 4 is allocated to serving the needs of our foundry customers.

The strategic evaluation is expected to include a range of possible options, including but not limited to joint ventures, strategic partnerships, as well as M&A possibilities. The Company has retained financial and legal advisors to assist in the evaluation. As we proceed with this strategic evaluation process, we intend to be mindful of the best interests of shareholders, customers and employees.

Looking ahead, our current view is that utilization in Fab 4 will experience a severe decline in the first half of 2019 due to an inventory correction as well as our decision to be more selective about the business as we undergo the strategic evaluation process. This in turn will depress gross margins for the foundry and for the Company as well.

Our current view is that we are cautiously optimistic that revenue for MagnaChip for the 2019 year likely will decline by low single-digit percentage points as compared with 2018 despite current foundry weakness.

Our current expectation is that we will see a strong recovery in the second half of 2019 and exit the year on an upswing with a gross margin level in Q4, consistent with our performance for the 2018 year. We will exercise discipline was expenses in 2019. SG&A and R&D expenses in 2019 are expected to be below the 2018 level. We also have implemented a hiring fees, except for R&D personnel.

Before I turn the call over to Jonathan, let me conclude by saying, I'm excited that Magnachip is on the verge of making a major strategy shift (ph) that will change our future course. Jonathan?

Jonathan Kim -- Chief Financial Officer, Executive Vice President and Chief Accounting Officer

Thank you, YJ, and welcome to everyone on the call. As a reminder, the results that we discuss are historical numbers on an as reported basis and reflect year-over-year results, unless otherwise noted. Please refer to our published financial tables for the as adjusted historical numbers to reflect changes associated with the transfer in January, 2018. Our portion of our non-OLED display business from the Standard Products Group to Foundry Services Group as part of a portfolio optimization initiative.

Let's begin with our corporate financial recap of 2018. Several key financial measures in 2018, including revenue, gross profit dollars, operating income and adjusted EBITDA achieved their highest annual levels since 2012. We achieved these results despite softness in our foundry business caused in part by an uncertain macroeconomic climate as well as higher labor costs and substantially higher wafer prices that dampened gross margin.

Here's a snapshot of the key financial measures in 2018 and how they compare to 2017. Revenue of $750.9 million increased 10.5% from $679.7 million. Gross profit dollars of $198.1 million increased 5.4% from $187.9 million. Operating income of $47.4 million increased 20.9% from $39.2 million and adjusted EBITDA was $84.3 million, up 7.1% from $78.7 million.

Let's now turn to our 2018 financial recap. SPG revenue in 2018 increased 18.4% over 2017 and increased 29.3% on an as adjusted basis. SPG benefited from a three-fold increase in OLED revenue and a 13% year-over-year increase in power revenue.

Foundry revenue increased 1.6% from 2017, but declined 7.2% on an as adjusted basis. SPG revenue was 56.7% of total revenue in 2018 compared to 52.9% in 2017, and 48.4% on an as adjusted basis.

Foundry revenue was 43.3% of total revenue in 2018, compared to 47.1% in 2017 and 51.6% on an as adjusted basis. Our top ten customers represented 61% of revenue in 2018 as compared to 57% in 2017. Total gross profit dollars was $198.1 million in 2018 up 5.4% from 2017 as a result of a $23.3 million increase in gross margin dollars from SPG and an increase of $29.6 million on an as adjusted basis.

The gain in total gross profit dollars was achieved despite a decrease of $12.9 million in gross profit dollars from foundry and a decrease of $19.2 million on an as adjusted basis.

We believe gross margin dollars is a key financial metric worth monitoring because revenue growth can drive fall through to operating income, adjusted EBITDA and cash flows from operations, and that's exactly what happened in 2018.

Total gross profit margin was 26.4% in 2018 compared to 27.6% in 2017. Within the segments, foundry gross margin of 25.4% in 2018 compared to 29.8% in 2017 and to 29% on an as adjusted basis as a result of lower fab utilization, particularly in our larger Fab 4.

SPG gross margin was 27.1% in 2018 compared to 25.7% in 2017 and 26.1% on an as adjusted basis. The improvement in SPG margin year-over-year reflecting a better product mix in OLED display drivers as well as a higher percentage of revenue from premium products in our power business.

Both OLED and power revenue are expected to grow in 2019 and related gross margin for SPG is expected to decline in the first half of 2019, but to recover in the second half due to an improved product mix.

Operating income was $47.4 million or 6.3% of revenue in 2018, up 20.9% from $39.2 million or 5.8% of revenue in 2017. Adjusted EBITDA was $84.3 million or 11.2% of revenue in 2018, up 7.1% from $78.7 million or 11.6% of revenue in 2017. Lastly, SG&A was $72.6 million or 9.7% of revenue in 2018 down 11.2% from $81.8 million or 12% of revenue in 2017, as we focused on cost controls to improve profitability. R&D was $78 million or 10.4% of revenue in 2018, up 10.7% from $70.5 million or 10.4% of revenue in 2017, as we invested more resources, primarily into our OLED business.

Let's turn now to Q4 financial results. Revenue of $179.4 million came in at the midpoint of our guidance range of $174 million to $184 million. Revenue was up 2.8% from a year ago, due primarily to an increase of 2.5% year-over-year growth in the Standard Products Group and 14.3% on an as adjusted basis.

Power revenue increased to 14.6%, year-over-year, reflecting strength in premium products. Display revenue declined 6.6% year-over-year, but increased 13.9% on an as adjusted basis, reflecting the higher percentage of revenue from OLED, as a result of a previously mentioned transfer of LCD business to the Foundry Services Group.

Foundry revenue in Q4 was up by 3.1% year-over-year, but down by 8% on an as adjusted basis, due to factors we described elsewhere on the call today. Total gross profit margin of 24.5% in Q4 was below the guidance range of 25% to 27% and down 3.8 percentage points year-over-year, due primarily to lower fab utilization, particularly in our foundry related business.

Increased inventory reserve related to a legacy display product and also due to increased costs for wafers and labor. Notably, we're in the process of actively negotiating with our vendors to curb the persistent wafer price increases. As a result, we expect raw wafer costs for the Company to trend down modestly during 2019.

Gross profit dollars in Q4 was down 11% year-over-year. Total fab utilization declined to the mid 80% range in Q4 from the 90% range in Q4 last year, although the decline was steeper and more impactful in our larger Fab 4, which is primarily used by our foundry business. We now expect utilization in Fab 4 to decline significantly in Q1, consistent with a continuing inventory correction and our decision to be more selective about business as we undergo our strategic evaluation process and our gross margin will decline in tandem during Q1.

Turning now to operating expenses in Q4, SG&A was $17.5 million or 9.8% of revenue as compared to $23.6 million or 13.5% in Q4 a year ago. The decrease was primarily related to a $4.2 million in special charge taken in Q4, as a result of a tax audit by the Korean National Tax services.

R&D was $18.5 million or 10.3% of revenue, as compared to $18.1 million or 10.4% in Q4, a year ago. The increase of $0.5 million or 2.5% was due primarily to development activities for new OLED products.

Looking ahead, SG&A and R&D expenses in dollar terms in 2019 is expected to be lower than in 2018, as we focus on cost control. Turning now to the balance sheet, cash was $132.4 million at the end of Q4 2018, as compared with $133.5 million in Q3 2018 and $128.6 million in Q4 2017.

Accounts receivable totaled $80 million, a decline of 22.5% from $103.2 million in Q3. The decrease was related to the timing of payments from certain customers. Inventories in Q4 of $71.6 million were flattish with $71.5 million in Q3. CapEx totaled $10.1 million in Q4, compared with previously estimated guidance of $16 million. We reduced CapEx as a prudent measure due to lower than expected loading in our fabs, particularly in Fab 4.

For the full year 2018, CapEx was approximately $33 million or $29 million on a normalized basis as compared to a previously estimated plan to spend approximately $39 million or $35 million on a normalized basis in 2018. The normalized basis excludes a $4.3 million payment for a purchase of certain assets related to a water treatment facility arrangement that was fully financed by a third party.

With that, here's our guidance for Q1. For the first quarter of 2019, MagnaChip anticipates revenue in this seasonally soft quarter to be in the range of $150 million to $155 million, down sequentially about 15% at the midpoint of the projected range. The guidance for the first quarter of 2019 compares with revenue of $179.4 million in the fourth quarter of 2018 and $165.8 million in the first quarter of 2018.

Gross profit margin to be in the range of 14% to 16%. This compares to 24.5% in the fourth quarter of 2018 and 26.9% in the first quarter of 2018, both revenue and gross profit margin guidance reflect a downturn in the foundry business, due in part to a continuing inventory correction and the Company's decision to be more selective about business as it undergoes a strategic evaluation process.

With that, I will turn the call back to Bruce. Bruce?

Bruce Entin -- Head of Investor Relations

Thank you, Jonathan. So, Chris, this concludes our prepared remarks. We now would like to open the call for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions). And our first question comes from Suji Desilva with ROTH Capital. Your line is now open.

Suji Desilva -- ROTH Capital Partners -- Analyst

Hi, YJ. Hi Jonathan. So question first -- so first on the gross margin, look, perhaps you know, the first half, what is your plan for utilization and how you plan to run the Fab near term in terms of managing and what portion of the business do the foundry has which you consider desirable versus not desirable to understand how much you're trying to kind of flush out of the system if you would?

Jonathan Kim -- Chief Financial Officer, Executive Vice President and Chief Accounting Officer

Hi, so I think we mentioned a number of things in connection with what's impacting the utilization and it's mostly related to the inventory correction and the China slowdown that lot of folks have talked about out in the industry, but it also has to do with our strategic evaluation process as well.

So having said that, also during the second half, out in the industry, we also hear about a recovery, and so with the inventory correction and the China slowdown aspect of the impact, it recovers during the second half, we do see a recovery in the second half, and so in connection with that, we're going to continue to service our foundry customers and we do see a recovery in the second half, and so we're being selective for now in connection with the strategic evaluation process, but the expectation is that with the improvement in the inventory correction as well as the China slowdown in the second half, we should see the related improvement.

Suji Desilva -- ROTH Capital Partners -- Analyst

Okay. And then on the OLED business, what's the typical number of wins you'd expect in a given quarter, you had five this quarter and how much potential is there for that business to grow in '19, given that you have a lot more designs in flight now ramping versus a year ago? What's the potential there?

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Yes Suji, that's very good question. So I think that the -- in the '17 year of design win and that helped to go into '18 ramp and then more on the design win in the numbers, but if you look at now, we are getting a point where the business on OLED is stabilizing. It's matter of a key quality designs that we win.

So for example, in the Q1, we are guiding now that the OLED revenue to grow this quarter, that's due to key 13 number design, that's really ramping up despite the China slowdown market.

So I would say that going forward, it's a matter of the -- not necessarily in total number, but it's a quality of the each design wins. So, and with our 20-nanometer, I think that our portfolio is more strengthened, so that's how we see the 2019 to grow over 2018.

Suji Desilva -- ROTH Capital Partners -- Analyst

Okay. Thanks YJ, and then my last question is on the foundry restructuring announcement here, you did entitled (ph) it three months ago, so I just wanted to ask more contextual question you had a review for the Company about a year plus ago and took longer than a year. What's the timeframe you imagine for this process, if you can give us any thoughts there, and then are there any participants from the last review that perhaps you're still engaged with, and maybe you could just talk about why now is the time for you guys to look at the foundry business in this light versus the past?

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Yes. So I see there is multiple question there, so I'll try to answer one by one, but in terms of timing, look, our goal is to go through the strategic evaluation process. Our goal is to conclude, in terms of the -- why now, you know, if you look at the -- when we took over the business few years ago, and we solidified the power business, now power is growing very nicely, it's higher than corporate gross margin growth for '19 and beyond with automotive sector, if you look at the display, we transformed the Company from the LCD now to OLED. OLED now account 73% and we are the leader in the industry as an independent guy have shipped more than 400 million units.

So the next that we have to look at is the -- how to fix the foundry for next level. So that's what it is.

Suji Desilva -- ROTH Capital Partners -- Analyst

Any thoughts on timeframe, YJ?

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Yeah, we don't speculate on time. But our goal is to go through the process and conclude it.

Suji Desilva -- ROTH Capital Partners -- Analyst

Okay. YJ, I'll pass it along. Thank you.

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Thank you.

Operator

Thank you. (Operator Instructions). And our next question comes from the line of Ari Shusterman (ph) with Needham & Company. Your line is now open.

Ari Shusterman -- Needham & Company -- Analyst

Hello, this is Ari. And I'm speaking -- I'm asking a question on behalf of Rajvindra Gill from Needham & Company. So this is with regards to the Foundry business. I think you hinted at this, probably (Technical Difficulty) declining so much in foundry, when it's 42% (ph) (Technical Difficulty) and how much foundry is China and I think you also talked about inventory correction, can you give some more color on that please?

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Yeah, it was hard to hear, it was breaking down, but the -- so the slowdown in the foundry, I think that's industry global. So you see the latest foundry people reporting the results all soft outlook for the first half and then rebound second half.

So I think that, that's consistent in the foundry customer. In terms of our exposure to China as we said before earlier that the about more than 40% of total revenue come from China directly or indirectly, through distribution or through our panel makers as a customer.

I hope that answers your question.

Operator

And I'm not showing any further questions at this time. I would now like to turn the call back to Mr. Bruce Entin, Head of Investor Relations for any further remarks. Actually we do have one...

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Go ahead.

Operator

Actually that does conclude today's program. I would like to turn it back to Mr. Bruce Entin.

Bruce Entin -- Head of Investor Relations

So thank you, Chris. This concludes our fourth quarter 2018 earnings conference call. Please look for details of our future events on MagnaChip's Investor Relations website. Thank you for joining us today.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.

Duration: 35 minutes

Call participants:

Bruce Entin -- Head of Investor Relations

Young-Joon (YJ) Kim -- Board of Director, Member of the Risk Committee and Chief Executive Officer

Jonathan Kim -- Chief Financial Officer, Executive Vice President and Chief Accounting Officer

Suji Desilva -- ROTH Capital Partners -- Analyst

Ari Shusterman -- Needham & Company -- Analyst

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