UK's Competition And Markets Authority Sticks Probe In SK Hynix's $9bn Proposed Buy Of Intel's NAND And SSD Units

Britain's Competition and Markets Authority (CMA) is investigating SK Hynix's agreed $9bn purchase of Intel's NAND and SSD businesses to ascertain if the deal would negatively impact the local buyers.

The competition regulator, a non-ministerial government department, is inviting interested parties to comment over the next fortnight or so on the proposed arrangement between the South Korean semiconductor biz and Chipzilla.

"The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result… in a substantial lessening of competition within any market or markets in the United Kingdom for good or services," it said.

Comments must be received by 11 May, after which the CMA revealed it "formally commences" the "phase 1 investigation".

The $9bn purchase agreement between Intel and SK Hynix in October envelops the NAND memory and storage business, including NAND SSDs, the NAND component and wafer business, and the Dalian NAND memory facility in China.

If signed and sealed, the buy would see SK leapfrog Kioxia as the world's second largest provider of flash memory behind Samsung, which accounts for roughly a third of global production.

Intel's NAND business generated around $2.8bn in revenue and $600m in operating profit during the first half of 2020.

Under the terms of the sale Intel is retaining the Optane business, the companies confirmed at the time.

The pair are expecting government approval in late 22021, at which point SK Hynix would buy the NAND SSD biz and the manufacturing site for $7bn. The remaining assets – IP related to the manufacture and design of NAND flash wafers, R&D staff, and the fab workforce – is scheduled to be bought for $2bn upon final closing of the sale, expected in March 2025.

This morning, SK Hynix reported an 18 per cent year-on-year spike in revenue to 8.494 trillion won (£5.17bn/$7.17bn) for Q1 ended 31 March. Operating profit was up 66 per cent to 1.324 won (£646m/$897m).

The massive demand for semiconductors saw the company pull forward capital expenditure planned for 2022 to pay for chip making kit. ®