SK Hynix acquires Intel NAND flash memory division for $9 billion

South Korean semiconductor company SK Hynix is acquiring Intel’s NAND flash memory division for US$9 billion.

The acquisition, announced on Oct. 20, will see SK Hynix absorb Intel’s NAND SSD-associated IP and employees, as well as Intel’s NAND fab in Dalian, China. Although the purchase would undoubtedly expand SK Hynix’s NAND storage portfolio, SK Hynix will also gain Intel’s current customer base.

“I am proud of the NAND memory business we have built and believe this combination with SK Hynix will grow the memory ecosystem for the benefit of customers, partners and employees,” said Bob Swan, CEO of Intel, in a press release. “For Intel, this transaction will allow us to further prioritize our investments in differentiated technology where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders.”

The SK Hynix press release also explained that Intel intends to focus on AI, 5G, but the move to sell its NAND production can be seen as a move to focus on its core products like processors. With that said, Intel will retain its Optane 3D XPoint storage-class memory technology and stay in the storage business. 

Intel’s Non-Volatile Memory Solutions Group (NSG) has fallen on hard times. In Intel’s Q1 2019 earnings call, Swan noted that its memory business fell 12 per cent due to NAND’s pricing pressures, low demand, and deteriorating average sale price.

“We got to generate more attractive returns on the NAND side of the business,” Swan said in the call. “And the team is very focused on making that a reality. And to the extent there is a partnership out there that’s going to increase the likelihood and/or accelerate the pace, we’re going to evaluate those partnerships along the way so it can be enhancing to the returns of what we do in the memory space.”

Intel will receive an initial US$7 billion payment. The remaining US$2 billion will be paid upon the final closing in March 2025. Intel will retain all IPs related to the manufacturing and design of NAND flash wafers until the final closing.

A trip down the memory lane

Intel first partnered with Micron Technologies in 2006 to produce solid-state drives under Intel Micron Flash Technologies (IMFT) banner. As part of their partnership, Intel purchased Micron’s NAND at cost. Products from their partnership included SSDs for both enterprises and consumers.

In 2015, Intel and Micro created 3D XPoint flash storage-class memory,  a non-volatile memory that was much faster and durable than traditional NAND flash storage. The technology was sold under the Optane and QuantX SSD brands. In the same year, Intel announced that it would build its own NAND fabrication plants in Dalian, digressing from Micron’s NAND division. The pair continued to collaborate on 3D XPoint. 

Intel and Micron eventually ended their 3D XPoint partnership in July 2018. Soon after, Micron expressed interest in purchasing Intel’s final IM Flash fab in Utah to produce 3D XPoint chips in October 2018. The deal closed in late 2019. As a part of the deal, Micron had promised to sell 3D XPoint chips to Intel while it figures out a transition plan.

There could be a good reason why Intel didn’t turn its Dalian 3D NAND fab into a 3D XPoint fab. In a comment to Blocks & Files, analyst Jim Handly said Intel’s 3D XPoint is very unprofitable to produce. He estimated that Intel lost $2 billion on 3D XPoint in 2017 and 2018, and $1.5 billion in 2019. That’s unsurprising, however, as 3D XPoint memory production is nowhere near as mature as 3D NAND.

Given Micron and Intel’s extensive history, Micron’s seeming disinterest in Intel’s NAND business came as a surprise.

Intel and Micron were not immediately available for comment.

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Tom Li
Tom Li
Telecommunication and consumer hardware are Tom's main beats at IT World Canada. He loves to talk about Canada's network infrastructure, semiconductor products, and of course, anything hot and new in the consumer technology space. You'll also occasionally see his name appended to articles on cloud, security, and SaaS-related news. If you're ever up for a lengthy discussion about the nuances of each of the above sectors or have an upcoming product that people will love, feel free to drop him a line at [email protected].

Featured Articles

Cybersecurity in 2024: Priorities and challenges for Canadian organizations 

By Derek Manky As predictions for 2024 point to the continued expansion...

Survey shows generative AI is a top priority for Canadian corporate leaders.

Leaders are devoting significant budget to generative AI for 2024 Canadian corporate...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now