US chipmaker Intel (INTC) is selling part of its memory chip business to SK Hynix for $9 billion in a deal that would make the South Korean company the world’s second biggest flash memory chipmaker.
SK Hynix will acquire Intel’s NAND memory chip business, including associated manufacturing and design patents, as well as the US firm’s factory in Dalian, China, the companies said in a statement on Tuesday. Intel’s NAND flash memory products are used in devices such as smartphones, tablets and hard drives. The US company will keep Optane, its advanced memory chip technology business.
The deal is expected to close in March 2025.
Shares in SK Hynix were last down more than 2% in Seoul.
The acquisition marks the latest big tie-up in the rapidly consolidating semiconductor industry.
Nvidia (NVDA), known mainly for making chips for video game graphics, announced last month that it would acquire UK-based chip designer Arm for $16 billion. Advanced Micro Devices (AMD) is also reportedly in advanced talks to buy Xilinx (XLNX) in a deal that could be valued at more than $30 billion, according to The Wall Street Journal, which cited people familiar with the matter. Xilinx (XLNX) told CNN Business that it does not comment on “rumors and speculation.” AMD did not respond to a request for comment outside of regular working hours.
The deal comes after Intel admitted it was struggling to produce in volume the next generation of leading edge chips. The company said in July that production of 7 nanometer chips would be delayed until 2022. Meanwhile rivals Taiwan Semiconductor (TSM) Manufacturing Company (TSMC) and South Korea’s Samsung are already successfully producing and selling the chips.
Intel is still an industry leader when it comes to chipmaking, and remains the only US company able to compete with TSMC and Samsung when it comes to designing, manufacturing and producing advanced chips.
But it costs a lot of money to stay at the cutting edge.
US semiconductor firms spent $72 billion on research and development and capital expenses in 2019, compared to $40 billion in 2007, according to a September report from Eurasia Group.
For Intel, the deal “will allow us to further prioritize 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,” Intel CEO Bob Swan said in a statement.
For SK Hynix, acquiring part of Intel’s memory chip business will allow the South Korean company to vault from fourth place in the global rankings of NAND flash chip makers to second, just behind rival Samsung.
The company currently has an 11.7% market share, compared to Samsung’s 31.4%, according to TrendForce. With Intel’s business, it would have a consolidated market share of 23.2%.
