Intel Corp. has agreed to offer its NAND memory chip company to SK Hynix Inc (KS:000660) for $9 billion in a deal that is all-cash would propel the South Korean chipmaker to second into the worldwide ranks.
The move marks your time and effort that is latest by the U.S. chip giant to divest its non-core organizations, move away from the volatile commodity NAND chip industry and focus on its remaining memory business, Optane.
It’s the purchase that is biggest up to now for SK Hynix, assisting it overtake Japan’s Kioxia Holdings Corp . in the NAND memory market and slim the space with market frontrunner Samsung Electronics.
SK Hynix stocks rose just as much as 4.8% just after the headlines before reversing gear to fall 1.5percent, in comparison to an apartment wider market (KS11).
“For the short-term, the deal could be a burden that is monetary SK Hynix, which will be anticipated to continue steadily to post losings in its NAND business, dogged by oversupply,” stated Park Sung-soon, an analyst at Cape Investment & Securities.
“For the longer term, it’ll trigger industry consolidation and help reduce competition while helping Hynix that is SK pull of competitors.”
SK Hynix said Intel would offer every one of its NAND business including its drive that is solid-state business NAND component and wafer business, as well as its factory in Dalian, China. Intel would keep its Optane company, its memory that is advanced level technology. Intel Corp. has agreed to offer its NAND memory chip company.
Intel’s factory in Dalian makes potato chips that compete within the commodity that is cut-throat business where rates period through booms and breasts that can consume profits.
Intel’s alleged Optane memory, by contrast, makes use of more technology that is advanced causes it to be closer in rate to DRAM potato chips but at NAND rates.
Intel CEO Bob Swan has told investors he intends to divest organizations that are non-core. The business earlier sold its modem that is 5G business Apple Inc (O:AAPL).
“This deal allows us to help prioritize our opportunities in differentiated technology,” Swan said in a statement.
Intel said it intended to spend the profits associated with the deal to provide leadership items and advance its long-term growth priorities, including artificial intelligence and networking that is 5G.
SK Hynix stated the ongoing businesses aimed to have federal government approvals in belated 2021, and close the offer in March 2025.
The Nand Flash industry expanded in the April-to-June quarter thanks to need that is robust PCs and servers because the COVID-19 pandemic forced millions of people to function at home, according to market researcher Trendforce.
SK Hynix, which counts Apple and Huawei Technologies Co Ltd [HWT.UL] as customers, is really a distant 4th in the NAND memory chip market, although it ranks 2nd after Samsung Electronics in DRAM memory product sales.
Samsung could be the frontrunner into the NAND flash market having a 31.4per cent share, followed closely by Kioxia with 17.2 percent, SK Hynix with 11.7per cent, and Intel and Micron (O:MU) with 11.5% each.
With all the purchase, SK Hynix, section of south conglomerate that is Korean Group, may have a market share of 23.2%.
The Wall Street Journal reported earlier that the offer ended up being imminent. Intel’s shares were up nearly 3% after the report.