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Home › MarketWatch › Insider: SK hynix plans to acquire Intel’s Dalian factory and 3D NAND business
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Insider: SK hynix plans to acquire Intel’s Dalian factory and 3D NAND business

SemiMediaEdit
July 12, 2019

According to semiconductor industry insiders, SK Hynix plans to acquire Intel's Fab 68 plant in Dalian, China. The industry stressed that SK hynix is currently negotiating with Intel for the acquisition of the factory and 3D NAND business.

In Intel's business, 3D NAND is far less well-known than data center and PC. According to the insider, Intel's NAND Flash products were rarely sold outside, and more were used to support the data center business. In the past two years, the proportion of externally sold NAND flash products has increased. The external sales of 3D NAND are handled by Intel's NSG (Non-Volatile Memory Solutions Group). In 2016, 2017, and 2018, NSG's revenues were $2.58 billion, $3.51 billion, and $4.3 billion, respectively, an average annual increase of about 20%. However, due to the excessive investment in 3D NAND in the early stage and the equipment of the Dalian plant is still in the depreciation period, the NSG business has continued to lose money since 2016. In 2016 and 2017, NSG lost 540 million US dollars and 260 million US dollars respectively. In 2018, NSG received a $160 million government grant, but still lost $5 million.

About SK Hynix, after accumulating a large amount of cash flow in the previous memory chip price increase cycle, it began to accelerate the pace of expansion. In 2018, Hynix spent $1.6 billion on repurchasing shares and invested more than $3 billion in a new semiconductor plant in South Korea. The plant is expected to be completed in 2020. At the end of 2018, Hynix launched capacity expansion of the Wuxi production line, and has completed the expansion in April 2019. It is worth mentioning that even with a large amount of capital expenditure, Hynix's cash balance at the end of 2018 is still as high as 7 billion US dollars, which provides financial support for Hynix's acquisition.

For the amount of the acquisition, the industry insider believes that the price of the factory may be about $8 billion, plus the NAND business, which may exceed $10 billion.

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