South Korea’s SK Hynix to buy Intel’s NAND business for $9 billion

South Korea’s SK Hynix to buy Intel’s NAND business for $9 billion

SEOUL/SAN FRANCISCO (Reuters) – Intel Corp INTC.O has agreed to sell its NAND memory chip business to SK Hynix Inc 000660.KS for $9 billion in an all-cash deal that would propel the South Korean chipmaker to second in the global rankings. The move marks the latest effort by the U.S. chip giant to divest its

SEOUL/SAN FRANCISCO (Reuters) – Intel Corp INTC.O has agreed to sell its NAND memory chip business to SK Hynix Inc 000660.KS for $9 billion in an all-cash deal that would propel the South Korean chipmaker to second in the global rankings.

The move marks the latest effort by the U.S. chip giant to divest its non-core businesses, move away from the volatile commodity NAND chip industry and focus on its remaining Optane memory business, which is smaller but more lucrative because it taps more advanced technology.

It is the biggest acquisition to date for SK Hynix and follows its $3.7 billion investment in Japanese rival Kioxia in 2017, as the Korean firm tries to boost its capacity to build NAND chips – used to store data in smartphones and data centre servers – and beef up its pricing power.

The deal will help SK Hynix overtake Kioxia 6600.T in the NAND memory market while narrowing the gap with market leader Samsung Electronics Co Ltd 005930.KS.

SK Hynix shares jumped immediately after the news before valuation concerns saw them reverse gear to fall 2%, while the wider market .KS11 was down 0.7%. Samsung Electronics gained 1%.

“Shareholders are negative about the deal because they believe the price is too expensive. It’s good news for other memory chipmakers, because the move would lead to industry consolidation,” said Lee Seung-woo, an analyst at Eugene Investment & Securities.

SK Hynix said Intel would sell all of its NAND business including its solid-state drive business, NAND component and wafer operation, and its factory in Dalian, China.

Intel would keep its advanced Optane memory technology, developed in partnership with Micron Technology Inc MU.O, which makes the Optane chips for Intel under a supply agreement.

The Intel division which includes its NAND and Optane businesses posted a fourth consecutive annual loss in 2019, although it swung to a profit in the first half of this year. SK Hynix has also posted losses in its NAND business.

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