Intel has agreed to promote a part of its reminiscence enterprise to South Korean chipmaker SK Hynix for $9bn, within the newest upheaval within the international pc chip trade.
Seoul-headquartered SK Hynix will purchase Intel’s Nand reminiscence and storage enterprise over the following 5 years, it stated in an announcement to the inventory alternate on Tuesday. The acquisition consists of related element and wafer items in addition to the US group’s fabrication facility in Dalian, China.
“This transaction will permit us to additional prioritise our investments in differentiated know-how the place we are able to play a much bigger function within the success of our prospects and ship engaging returns to our stockholders,” stated Bob Swan, Intel chief govt, within the SK Hynix assertion. Intel didn’t remark additional.
Intel will retain its proprietary reminiscence chip know-how, Optane, a key a part of its plans to consolidate its main place within the infrastructure underpinning information centres.
The deal, which requires regulatory approvals, comes amid a collection of changes by Intel because it shifts out of non-core actions. For the US chipmaker, a sale of the Nand enterprise — chips that present long-term information storage — marks an exit from a enterprise that has more and more been considered as non-strategic.
Intel stated it could make investments the transaction proceeds in areas akin to 5G networking and synthetic intelligence.
The sale of the Nand flash reminiscence operation is Mr Swan’s newest step to refocus on fewer markets, following the sale of Intel’s smartphone modem enterprise to Apple final 12 months. In July Intel stated it was contemplating contracting out extra of its chip manufacturing after it pushed again the launch of its subsequent era of processor chips by six months.
Pressures within the Nand market harm Intel’s company-wide revenue margins in 2019, however a restoration in pricing this 12 months has contributed to a rebound.
Lee Seok-hee, SK Hynix chief govt, stated the acquisition would assist make the South Korean firm’s Nand place “comparable with what we achieved in Dram”.
In Dram — chips that allow units to carry out a number of duties — SK Hynix ranks second solely to Samsung in market share, forward of US group Micron and Taiwan’s Nanya Expertise.
The addition of Intel’s enterprise will make SK Hynix the second-biggest producer of Nand chips, propelling it forward of Japan’s Kioxia and Micron. Samsung is the Nand market chief.
The deal provides to a blockbuster 12 months for semiconductor M&A with transaction worth in 2020 on tempo to be the second highest on file, behind 2015. That’s on the again of Nvidia’s $40bn buy of chip design group Arm from Japan’s SoftBank and Analog Gadgets’ acquisition of Maxim Built-in merchandise for greater than $20bn.
The $9bn acquisition, which was first reported by the Wall Road Journal, is without doubt one of the largest tech transactions in South Korean historical past, rivalling Samsung Electronics’ $8bn acquisition of US driverless automobile know-how group Harman Worldwide Industries.