Technology

Intel to Market NAND Flash Memory Organization to SK Hynix for $9 Billion

The world’s second-most significant chipmaker, South Korea’s SK Hynix, on Tuesday announced a $9 billion (approximately Rs. 66,000 crores) deal to get Intel’s flash memory chip operation as it seeks to bolster its posture against rival behemoth Samsung Electronics.

SK Hynix is by now the planet selection two maker of DRAM chips, utilized in computer systems and servers, and the second-most significant chipmaker total.

But it has lagged in the sector for flash memory, or NAND chips, which are utilized in day-to-day gadgets these as smartphones and USB storage drives, as properly as industrial and healthcare machines.

In a regulatory filing, SK Hynix claimed it will obtain Intel’s “full NAND enterprise division excluding the Optane division” for KRW 10.3 trillion (roughly Rs. 66,300 crores), with Intel’s manufacturing facility in Dalian, China, integrated in the offer.

SK Hynix rated fourth by world wide NAND profits in the 2nd quarter this yr, in accordance to sector researcher Trendforce. Intel was sixth.

Their blend will see SK Hynix leapfrog Japan’s Kioxia and Western Electronic of the United States into 2nd area with a market place share of a lot more than 23 %, the Trendforce figures showed.

The NAND and DRAM markets are both equally dominated by Samsung Electronics, and world-wide chip need has boosted earnings for the two South Korean corporations in the latest several years.

The pair compete to supply chips to American giants this kind of as Apple, Dell and HP, as nicely as Chinese firms.

The Intel acquisition would fortify the NAND operations of SK Hynix, which have “not been as solid as its other corporations”, said Ahn Ki-hyun, vice-president of the Korea Semiconductor Market Association.

“With the deal, the corporation has firmly cemented its second-greatest posture in the global semiconductor business,” he included.

“In the extensive operate, the offer paves a way for it to turn out to be more aggressive in opposition to Samsung.”

Shares down

The founding organization of SK Hynix was originally aspect of the Hyundai group, one particular of the household-managed conglomerates recognized as chaebol that dominate company in the world’s 12th-most significant economic system.

In 2012, a multi-billion-greenback merger noticed it become portion of the SK Team, the third-major of the chaebols, headed by Chey Tae-gained, who is presently married to the daughter of late South Korean president Roh Tae-woo.

SK Hynix has grown to become a big corporation in its personal ideal and is the next most precious company stated on Seoul’s KOSPI inventory sector with a market place capitalisation of KRW 62 trillion (roughly Rs. 3,99,220 crores), guiding only Samsung Electronics.

But SK Hynix shares have been down a lot more than two percent on the announcement in morning trade.

Its CEO Seok-Hee Lee mentioned in a assertion that the Intel acquisition will enable the organization to “proactively answer to different wants from customers and optimise our enterprise structure”, and make its NAND flash sector posture “equivalent with what we reached in DRAM”.

The assertion cited Intel CEO Bob Swan saying the offer allows the US business to target on “differentiated technological know-how exactly where we can play a greater position in the achievements of our buyers”.

The acquisition will be compensated for in income, funded as a result of current reserves and borrowing, SK Hynix said.


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