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

SK Hynix is based in Seongnam, South Korea. (AP)
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Updated 21 October 2020

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

  • Work-from-home demand boosts chip demand for tablets

SEOUL: Intel Corp. has agreed to sell its NAND memory chip business to SK Hynix Inc. 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 US chip giant to divest its non-core businesses, move away from the volatile commodity NAND chip industry and focus on its remaining, more lucrative Optane memory business.

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 center servers — and beef up its pricing power.

The deal will help SK Hynix overtake Kioxia in the NAND memory market while narrowing the gap with Samsung Electronics.

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

“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, 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.

Analysts said US-China tensions may have influenced Intel’s decision to sell its NAND flash memory factory in China. The moves come a month after Kioxia canceled a planned initial public offering amid market uncertainty.

Intel’s Dalian factory makes chips that compete in the cut-throat commodity memory business

“This transaction will allow us to further prioritize our investments in differentiated technology,” Intel CEO Bob Swan said in a statement.

Swan told investors he planned to divest non-core businesses, after Intel sold its 5G modem business to Apple. SK Hynix said the companies aimed to obtain government approvals in late 2021, and close the deal in March 2025.

The NAND industry grew in 2020 thanks to demand for PCs and servers as the coronavirus forced millions to work from home.

SK Hynix, which counts Apple and Huawei Technologies as customers, is a distant fourth in the NAND memory chip market, although it ranks second after Samsung in DRAM memory sales.

Samsung is the leader in the NAND flash market with a 31.4 percent share, followed by Kioxia with 17.2 percent, SK Hynix with 11.7 percent, and Intel and Micron with 11.5 percent each.

With the acquisition, SK Hynix, part of South Korean conglomerate SK Group, will have a market share of 23.2 percent.

“Although the competitive environment surrounding us is not easy, we have made a bold decision to pave the way for our leap toward securing a firm position in the NAND business as in DRAM,” SK Hynix President and CEO Lee Seok-hee said in a statement.

US sanctions Chinese and Russian firms over Iran trade

Updated 29 November 2020

US sanctions Chinese and Russian firms over Iran trade

  • Four companies accused of ‘transferring sensitive technology and items’ to missile program

LONDON: The US has slapped economic sanctions on four Chinese and Russian companies that Washington claims helped to support Iran’s missile program.

The four were accused of “transferring sensitive technology and items to Iran’s missile program” and will be subject to restrictions on US government aid and their exports for two years, Secretary of State Mike Pompeo said in a statement.

The sanctions, imposed on Wednesday, were against two Chinese-based companies, Chengdu Best New Materials and Zibo Elim Trade, as well as Russia’s Nilco Group and joint stock company Elecon.

“These measures are part of our response to Iran’s malign activities,” said Pompeo. “These determinations underscore the continuing need for all countries to remain vigilant to efforts by Iran to advance its missile program. We will continue to work to impede Iran’s missile development efforts and use our sanctions authorities to spotlight the foreign suppliers, such as these entities in the PRC and Russia, that provide missile-related materials and technology to Iran.”

The Trump administration has ramped up sanctions on Tehran after withdrawing from the Iran nuclear deal in 2018.

Earlier this week, Pompeo met Kuwaiti Foreign Minister Sheikh Ahmad Nasser Al-Mohammad Al-Sabah, when the campaign of pressure on the Iranian regime was also discussed.

“I want to thank Kuwait for its support of the maximum pressure campaign. Together, we are denying Tehran money, resources, wealth, weapons with which they would be able to commit terror acts all across the region,” he said.

It is not yet clear how the incoming administration of Joe Biden will deal with Tehran and whether it wants to revive the nuclear deal which would be key reviving the country’s battered economy. The Iranian rial has lost about half of its value this year against the dollar, fueling inflation and deepening the damage to the economy.

Iran’s economy would grow as much as 4.4 percent next year if sanctions were lifted, the Institute of International Finance (IIF) said last week. 

The economy is expected to contract by about 6.1 percent in 2020 according to IIF estimates.