Intel signs agreement to sell NAND storage unit to SK Hynix

Intel Corp.

INTC 0.78%

has reached an agreement to sell the flash memory manufacturing business to South Korea

SK Hynix Inc.

000660 -1.61%

for about $ 9 billion to orient the semiconductor giant from an area of ​​historic importance that is increasingly being questioned.

The Intel device makes NAND flash memory products, which are mainly used in devices such as hard drives, pen drives, and cameras. The US chipmaker has been considering getting out of business for some time, due to falling prices for flash memory.

As part of the deal announced by the Wall Street Journal on Monday, SK Hynix plans to buy most of Intel’s memory business, including related memory manufacturing operations in Dalian, China, the South Korean company said in a statement. Intel will keep its Optane line of memory products, an advanced type of memory widely used in data centers.

The deal would make SK Hynix one of the world’s largest NAND memory manufacturers. According to Taiwan-based research firm TrendForce, the combined market share of SK Hynix and Intel was more than 20% in the second quarter, just behind the South Korean giant

Samsung Electronics Co.

which held over 30% of the market.

While Intel is best known for making the central processing units the heart of PCs, the company has deep roots in the memory business. It started as a memory manufacturer in the late 1960s before stiff competition from Japan’s burgeoning electronics industry in the 1980s caused the company to change course.

The memory chip market collapsed in 2018 due to an oversupply of devices, although it began to recover late last year. Analysts expect the NAND device market to remain strong in the coming years amid the surge in data storage.

READ  Utah Hospitals Covid: Proposed Criteria Would Ration Healthcare In Overcrowded Facilities

Still, Intel CEO Bob Swan said in April that the company needed to get more attractive returns from the NAND business and suggested they form a “partnership” to achieve that.

George Davis, CFO for the California-based company, said in March that while there are growing markets for flash memory, including in huge data centers, “We couldn’t make a profit from it to get the kind of returns that we do would like to see. ”

The technical battle between the US and China has defeated TikTok and Huawei and scared American companies that manufacture and sell in China. WSJ explains how Beijing is putting money into high-tech chips to become self-sufficient. Video / Illustration: George Downs / The Wall Street Journal

Intel reduced its commitment to memory manufacturing back in January when

Micron technology Inc.

MU 1.98%

bought Intel’s stake in a joint venture for around $ 1.5 billion. This company focused on an advanced storage technology called 3D XPoint.

Intel, valued at around $ 230 billion, is under increasing pressure as smaller competitors gain market share. The stock is down about 10% this year, compared with the PHLX Semiconductor Index rising about 30%. Shares fell more than 15% as Intel announced in July that second half results would be weaker than expected and further delays in adopting its super-fast 7-nanometer chip technology that will underlie future generations of central processing units lies.

While Intel struggled to mass-produce its most advanced chips, rival Advanced Micro Devices Inc.’s share of personal computer CPUs rose to over 17% in the first quarter and more than doubled from five years, according to Mercury Research. Intel holds almost all of the remaining market share.

Intel is expected to announce its third quarter earnings on Thursday afternoon.

The memory chip market has been rocked by US efforts to stem the rise of China’s technology industry and restrict exports to Chinese companies such as Huawei Technologies Co., the country’s leading manufacturer of telecommunications equipment. The Japanese memory chip maker Kioxia Holdings Corp., owned last month by a consortium led by the private equity firm Bain Capital delayed one of the most anticipated public offerings this year because of the situation.

Intel’s advanced flash memory, known as 3D NAND because multiple layers of memory cells are stacked on top of each other, has been manufactured in Dalian, a port city on the Liaodong Peninsula west of the Korean peninsula, for the past five years.

This factory is Intel’s only major chip manufacturing facility in China, and selling to SK Hynix would significantly reduce the company’s presence there.

The US has recently increased pressure on Chinese chip manufacturing, including by signing companies Obtain licenses before exporting some technology for China’s most advanced chip maker,

International semiconductor manufacturing

SMICY 2.39%

l Corp.

Consolidation has gripped the semiconductor sector as industry players seek scalability and expand their product portfolios to support the increasing number of everyday items connected to the internet.

Analog devices Inc.

agreed in July to pay more than $ 20 billion for it

Maxim Integrated Products Inc.,

and

Nvidia Corp.

in September agreed to pay $ 40 billion the British chip designer supports Arm Holdings

SoftBank group Corp.

AMD is in talks competing chipmakers to buy

Xilinx Inc.,

The Wall Street Journal reported earlier this month. The two parties are discussing a deal that could come together this week or next, provided the talks don’t fall apart, according to those familiar with the matter.

Some companies want to lose weight and narrow their focus.

Broadcom Inc.

Last year it investigated the sale of its radio frequency or RF unit, a segment of the wireless chip business that makes filters for clearing signals in cell phones. It later decided not to sell.

Write to Cara Lombardo at [email protected] and Dana Cimilluca at [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Written By
More from Arzu Moss

China joins Covax initiative to distribute coronavirus vaccines

In a statement announcing the Covax deal, Chinese Foreign Ministry spokeswoman Hua...
Read More

Leave a Reply

Your email address will not be published. Required fields are marked *