SK Hynix, the UK could slow the acquisition of Intel's NAND business

SK Hynix, the UK could slow the acquisition of Intel's NAND business

SK Hynix

The UK Competition and Markets Authority is examining SK Hynix's proposed acquisition of Intel's NAND and SSD business. Regulators like the CMA usually investigate large transactions to make sure they don't have any negative impact on local buyers and businesses. If the CMA believes that the acquisition would in any way adversely affect customers in the UK, it could slow down the deal and make certain requests.

At this point CMA invites interested parties to comment on the proposed transaction between SK Hynix and Intel. Regulator expects to receive comments by 11 May when Phase 1 investigations begin.

CMA statement reads:

CMA is considering whether this transaction will result in the creation of a material merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of such a situation results in a substantial decrease in competition within one or more UK markets for goods or services. To assist with this assessment, the CMA invites any interested party to provide any comments on the transaction. SK Hynix and Intel currently jointly control approximately 20% of the global NAND flash market, according to TrendForce. If SK Hynix manages to maintain this market share after taking over Intel's NAND assets, it will become the world's second or third largest supplier of flash memory. Furthermore, the transaction will reduce the number of major NAND producers to five, significantly reducing competition in the market. It remains to be seen whether or not regulators want to make requests to SK Hynix before approving the deal.

Intel and SK Hynix expect regulators around the world to approve the transaction by the end of 2021. Upon receiving approvals, SK Hynix will pay Intel seven billion dollars for Intel's NAND and SSD business, which includes the Chinese Dalian factory, IP and employees. The deal is expected to close in March 2025, when SK Hynix pays Intel the last $ 2 billion for the remaining assets, including the intellectual property related to the manufacturing and design of NAND flash wafers, employees of the "research and development ”and the Dalian workforce. Meanwhile, Intel will continue to produce NAND flash at the factory until the contract is closed.

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SK Hynix to increase spending on fab equipment in light of chip shortage

a circuit board © ZDNet

SK Hynix said on Wednesday that it will increase its spending on chip production equipment this year in light of the current global  chip shortage.

Spending in wafer fabrication equipment, or fab equipment, by semiconductor manufacturers are increasing due to the shortage, company CFO Kevin Noh said during SK Hynix's first quarter conference call .

In consideration of the increased lead time and setup period for the equipment, SK Hynix will execute some of its planned spending for 2022 earlier than scheduled to the second half of this year, the CFO said.

The subsequent increase in production capacity will take effect in 2022, Noh added.

Fab equipment makers Applied Materials and Lam Research have reported strong performances in their latest quarterly earnings from high demand for their equipment.

Earlier this month, the world's largest contract chip maker, Taiwan Semiconductor Manufacturing Company (TSMC) said it expects chip supply shortages to continue throughout 2022. AMD and Cisco are also expecting the shortage to continue throughout this year.

Last month, Samsung mobile boss DJ Koh said there was a serious imbalance in supply and demand of chips. However, Samsung's chip division and its boss Kim Ki-nam have so far not publicly commented on how the shortage is affecting its business. The South Korean tech giant recently saw its chip plant in Austin, Texas shutdown for a month from power outage due to winter storms.

Meanwhile, SK Hynix has reported sales of 8.49 trillion won and operating income of 1.32 trillion won in the first quarter. It is a rise of 18% and 65.5%, respectively, from the same time period in 2020.

The company said it saw high demand for its DRAM from mobile and PC sectors, despite the first quarter traditionally being the off-season. SK Hynix said it expects this high demand to continue.

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