A part of its memory chip business will be sold by the United States chipmaker Intel to the South Korean tech company SK Hynix in a deal worth $9 billion.
Following the completion of the deal, SK Hynix’s manufacturing capacity is slated to increase and make it the second biggest flash memory chipmaker of the world.
The companies said in a statement on Tuesday that the deal would include SK Hynix acquiring Intel’s NAND memory chip business which will include the related manufacturing and design patents as well as the factories of the United States based company in Dalian, China.
Devices such as smartphones, tablets and hard drives make use of Intel’s NAND flash memory products. However, Optane, its advanced memory chip technology business, will be retained by the US company.
The deal is expected to close in March 2025.
The global semiconductor industry is witnessing a rapid consolidation and this latest acquisition marks the latest big tie-up in the industry.
The acquisition of the United Kingdom based chip designer Arm in a deal worth $16 billion was announced last month by Nvidia, which is known primarily for making chips for video game graphics.
According to a report published earlier by The Wall Street Journal, which cited people familiar with the matter, negotiations of for the acquisition Xilinx by Advanced Micro Devices for a deal value of $30 billion are in the final stages. However, Xilinx told the media that it does not comment on “rumors and speculation” while no comments from AMD were available.
It was not long ago that Intel admitted that it was finding it difficult to manufacture in volume for the next generation of leading edge chips which shocked the market and investors. Production of 7 nanometer chips would be delayed until 2022, the company had admitted in July. On the other hand, producing and selling the chips is being done successfully by Intel’s rivals Taiwan Semiconductor Manufacturing Company and South Korea’s Samsung.
In addition to still being the chip making industry leader, Intel is also the only American company that has the capability to compete with the TSMC and Samsung with respect to designing, manufacturing and producing advanced chips.
But to stay at the cutting edge, it costs a lot of money.
According to a September report from Eurasia Group, in 2019, $72 billion was spent on research and development and capital expenses American semiconductor companies compared to $40 billion in 2007.
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.
After the acquisition of Intel’s memory chip business, SK Hynix will jump to te second position in the world with respect to NAND flash chip manufacturing – just behind rival Samsung.
(Adapted from CNN.com)