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Big M&A: SK Hynix’s $9 billion acquisition of Intel’s NAND business is the third in the semiconductor industry this year, a big acquisition

On October 20, SK Hynix officially announced that it would acquire Intel’s NAND flash memory and storage business for US$9 billion (approximately RMB 60.1 billion), and has signed an acquisition agreement with Intel. The deal includes Intel’s SSDs, NAND components, wafers, and Fab 68, its flash memory factory in Dalian, China.

Merge into a bigger giant to chase Samsung’s lead

However, Intel said it will continue to retain the Optane business and IP, and 3D XPoint will not be part of the sale to SK Hynix.

According to the statement, the transaction is also subject to the approval of various regulatory agencies, and the transaction is expected to be completed before the end of 2021.

Once permission is granted, the transaction will proceed in two stages. In the first stage, SK Hynix paid US$7 billion to acquire the NAND SSD business (including NAND SSD-related intellectual property rights and employees) and the Dalian factory from Intel. In the second phase, expected to take place in March 2025, SK Hynix will pay US$2 billion to acquire the remaining related assets from Intel, including intellectual property related to the production and design of NAND flash memory wafers, R&D personnel, and employees at the Dalian factory.

At present, Samsung is the leader in the field of NAND flash memory, with a global market share of about 31.4%, while SK Hynix has 11.7%, Intel has 11.5%, and the combination of the two has about 23.2%. It has narrowed the share gap with Samsung.

Intel has slimmed down many times to focus on its main business

It is understood that Intel has stated that it is seeking to sell part of the storage business in several previous financial statement briefings.

Intel’s NAND flash memory business and the Dalian fab to be sold this time have also been rumored to be sold to Yangtze Memory, but it seems that due to the Sino-US trade conflict, it cannot obtain the consent of US regulators.

This is Intel’s latest slimming move in recent years. In July 2019, Intel sold most of its smartphone modem business (modem) to Apple for $1 billion, involving 2,200 Intel employees to join Apple, as well as Intel’s IP and equipment and transfers.

In February 2020, foreign media broke the news that Intel will sell its home connection chip division to MaxLinear, an American analog chip company. The Home Connectivity Chips segment makes chips for Intel for DOCSIS modems and gateways, as well as chips for WiFi and smart home products.

This time, regarding the sale of the NAND flash memory and storage business to SK Hynix, Intel said that after selling the NAND storage business, it plans to invest the funds in artificial intelligence, 5G, autonomous driving and other fields.

Bob Swan, Intel CEO, said: “I am proud of our NAND storage business and believe that this merger with SK Hynix will advance the growth of the NAND ecosystem for the benefit of customers, partners and employees. For Intel, This transaction will allow us to further prioritize investments in differentiated technologies, where we can play a greater role in delivering customer value and deliver attractive returns to shareholders.”

Bloomberg commented: “This transaction will allow Intel to focus on its main business while consolidating its position in this booming market.” And this “main business” is considered to refer to the computer chip and data center business.

The third major acquisition in the semiconductor industry this year

In 2020 (mainly the second half of the year), there have been many large acquisitions in the semiconductor industry, and industry consolidation and reorganization are frequent.

On September 14, Japan’s SoftBank Group (SoftBank) officially announced that SoftBank Group has reached an acquisition intention with NVIDIA and the ARM board of directors. NVIDIA will package the acquisition of ARM in the form of $40 billion in cash + stock. The IoT Internet of Things service department formed under the main investment will not be included in this transaction and will not be packaged and sold with Arm.

Once the transaction is completed, it will not only be the largest asset sale in SoftBank’s history, but also the largest acquisition in the history of the global chip industry. Sun Zhengyi’s investment four years ago is expected to reap a return of 8 billion US dollars, but it still needs to wait for some countries’ anti-monopoly review later.

On October 9, it was reported that the US semiconductor giant AMD tried to acquire the chip maker Xilinx, and the transaction value may exceed 30 billion US dollars. This will be another blockbuster merger in the semiconductor industry after Nvidia’s acquisition of ARM.

Xilinx is the inventor of FPGAs, programmable SoCs, and ACAPs. FPGAs can be reprogrammed after production and are believed to help accelerate the development of fields such as artificial intelligence and 5G telecom base stations, from consumer electronics to automotive electronics to the cloud. industry development.

AMD is the world’s leading chip designer and manufacturer. Its CPU, GPU, motherboard chipsets and other products cover various fields such as computers, communications and consumer electronics.

Coupled with the acquisition of Intel’s NAND flash memory and storage business by SK hynix, these heavy restructuring and integration of the semiconductor industry in 2020 will have a profound impact on the future of the semiconductor industry, which is worth tracking and observing by the industry.