Intel has agreed to sell its NAND flash memory-chip business to South Korea’s SK Hynix 000660 -1.73% for about $9 billion, together with its manufacturing services in China’s Dalian. The unit makes NAND reminiscence chips, that are utilized in storage from smartphones to computer systems. Intel will preserve its small Optane enterprise, which makes superior reminiscence chips utilized in information facilities.
The deal is sensible for each events. Intel will get money to reinvest into its core central-processing-unit enterprise, which is struggling to mass produce its most advanced chips. It can additionally exit a low-margin enterprise that requires large capital investment. Intel is simply the sixth largest participant in NAND, missing the size to compete with market leaders comparable to Samsung Electronics. It additionally bought a very good worth: The deal values Intel’s NAND enterprise at 1.7 instances gross sales, in contrast with 1.1 instances enterprise worth to gross sales for Western Digital, in line with analysts at Cowen.
For SK Hynix, the deal will assist it to slim the hole with Samsung. SK Hynix and Intel mixed had about 23% of the NAND market within the second quarter, in line with Taiwanese analysis agency TrendForce. The transaction would put it forward of Kioxia’s 17% and simply behind Samsung’s 31%. SK Hynix may even get a much bigger piece of the pie within the extra profitable enterprise solid-state drives. Greater than 60% of SK Hynix’s NAND income comes from the cellular market, which is extra price-competitive, in line with TrendForce. It could additionally promote its new merchandise alongside its DRAM chips, utilized in processing.