In a joint press launch issued early this morning, SK Hynix and Intel have introduced that Intel can be promoting the whole lot of its NAND reminiscence enterprise to SK Hynix. The deal, which values Intel’s NAND holdings at $9 billion, will see the corporate switch over the NAND enterprise in two components, with SK Hynix finally buying all IP, amenities, and personnel associated to Intel’s NAND efforts. Notably, nevertheless, Intel will not be promoting their overarching Non-Volatile Memory Solutions Group; as an alternative the corporate can be holding on to their Optane reminiscence expertise as they proceed to develop and promote that expertise.
Per the phrases of the bizarre settlement, SK Hynix can be buying Intel’s NAND reminiscence enterprise in two components, with the deal not anticipated to utterly shut till March of 2025. Under the primary section, which can happen in 2021 as soon as all related regulatory our bodies have accredited the seal, SK Hynix can pay Intel the primary $7 billion for his or her SSD enterprise and Intel’s sole NAND fab in Dalian, China. This will see Intel’s shopper and enterprise SSD companies transferred to SK Hynix, together with the related IP and staff for the SSD enterprise, however not any NAND IP or staff. Similarly, whereas SK Hynix will get the Dalian fab, the primary section doesn’t include the staff that function it.
Following the primary section, Intel will proceed to develop and manufacture NAND out of the Dalian fab for roughly the following 4 years. This interval is about to final till the remainder of the deal absolutely closes in March of 2025. At that time, SK Hynix can pay Intel $2 billion for the remainder of their NAND enterprise. This will lastly switch all of Intel’s NAND IP and associated staff over to SK Hynix, together with the Dalian fab staff. Intel and SK Hynix haven’t supplied any rationalization for the extended acquisition, so we’re hoping to search out out a bit extra with the businesses’ related earnings calls this week.
Meanwhile, Intel will proceed to carry on to their Optane reminiscence enterprise. Optane is taken into account a “platform differentiator” by the corporate, as Intel intends to proceed leveraging the expertise for his or her distinctive, high-capacity NV-DIMMs. Accordingly, Intel has introduced that they are going to be persevering with to develop the underlying 3D XPoint expertise and promote merchandise based mostly on it, which is per their long-term aspirations of constructing Optane its personal tier within the reminiscence/storage hierarchy.
Overall, promoting off their NAND enterprise is an enormous step for Intel, an organization that started off making reminiscence. But it’s not fully sudden, as Intel has by no means been fairly as profitable with their NAND enterprise as they’d have preferred. And the core of the corporate’s NAND efforts, their longstanding IMFT joint-venture with Micron, began winding down in 2018 when the 2 corporations introduced that they’d cease collectively creating flash reminiscence.
Since then, Intel has largely been strolling its personal path, securing the #5 spot within the NAND trade (usually proper behind #Four SK Hynix) and releasing new merchandise, however scuffling with the commodity nature of the NAND enterprise. While Intel’s Non-Volatile Memory Solutions Group (NSG) as a complete introduced in $4.4B in income for 2019, the group has misplaced cash for Four of the final 5 years, recording flat or unfavorable working incomes. Only within the final six months has Intel made any actual cash off of NAND, reporting $600M in working revenue for the primary half of 2020. So though NSG – and by giant half, Intel’s NAND enterprise – have performed an enormous half in Intel’s file revenues, they haven’t turned a major revenue for an organization that’s famend for his or her 60% gross margins.
Intel NSG Revenue and Operating Income, 2015-2019
Meanwhile for SK Hynix, the Intel deal…
