Intel agrees to $9B sale of NAND biz to SK Hynix

The deal was presented by the two companies as a win-win, although SK Hynix's shares dipped by nearly 2% with investors apparently jittery about the hefty $9 billion price tag.

By selling its NAND memory and storage business to South Korea's SK Hynix, Intel says it will have much deeper pockets to invest in areas considered more strategic. AI and 5G networking, for example, and what it calls the "intelligent, autonomous edge."

"This transaction will allow us to further prioritise our investments in differentiated technology where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders," said Intel CEO Bob Swan in a prepared statement.

Further down memory lane

For its part, SK Hynix gets to turbocharge its memory chip business. The South Korean firm is already a big player in the booming DRAM market, second only to Samsung Electronics, but the $9 billion acquisition – according to a Bloomberg analyst – will similarly propel it into second spot in the NAND chip market (again behind Samsung) by overtaking Kioxia.

Seok-Hee Lee, SK Hynix CEO, spoke enthusiastically about portfolio expansion in the NAND flash market segment as being "comparable with what we achieved in DRAM."

Greg Roh, an analyst at HMC Securities, and cited by Bloomberg, reckoned the South Korean firm was getting a good deal. "Although there is some skepticism about the price, I think this won't be a burden because it will ensure solid long-term cash flow," he said.

Roh added that market consolidation was "good news for Korean memory chipmakers and will alleviate oversupply issues."

Five years

The transaction, should Intel and SK Hynix obtain all the necessary government approvals (expected late 2021), will not be fully signed off until 2025.

SK Hynix will initially stump up $7 billion for Intel's NAND solid state drive (SSD) business – including NAND SSD-associated IP and employees – and the US tech giant’s fabrication facility in Dalian, China.

The final $2 billion payment, if all goes to plan, will be made in March 2025. SK Hynix will then secure IP related to the manufacture and design of NAND flash wafers, as well as the absorption of R&D employees and the Dalian fab workforce.

Until final closing of the transaction, Intel will continue to manufacture NAND wafers at the Dalian memory manufacturing facility and retain all IP related to the manufacture and design of NAND flash wafers.

What's not part of the deal is Optane, Intel's memory technology that supports "real-time big data analytics." Intel said that it intended to continue investing, developing and scaling the Optane business.

— Ken Wieland, contributing editor, special to Light Reading

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