How SK Hynix will benefit from Intel’s NAND Flash business

TrendForce, a research firm, explained how SK Hynix will benefit from the $9 billion deal to buy Intel’s NAND Flash business and Dalian-based Fab 68, which is dedicated to 3D NAND Flash production.
SK Hynix chip business
SK Hynix said it will apply for permission from governments in China, the U.S., and South Korea, with the acquisition expected to conclude in March 2025.

“I am pleased to see SK Hynix and Intel’s NAND division, which have led the NAND flash technology innovation, work to build the new future together,” said Seok-Hee Lee, chief executive officer of SK Hynix.

Earlier Reuters reported that the Korean DRAM giant SK Hynix has announced that it will be investing KRW 120 trillion (about USD 107 billion) over 10 years, starting from 2022.

A research report from TrendForce indicated that SK Hynix has halted expansion plans for its Wuxi plant, and increased its investments at home, Korea, in order to be less reliant on China.

How SK Hynix will gain?

TrendForce, a research firm, said Intel’s NAND Flash business will assist SK Hynix to benefit from the complementary technologies, especially in the enterprise SSD market.

SK Hynix has 11.7 percent share and Intel has 11.5 percent revenue market share in the NAND Flash market in Q2 2020, placing the two companies in fourth and sixth places, respectively, TrendForce said.

SK Hynix has an advantage in the mobile market, including eMCP and eMMC products, accounting for more than 60 percent of SK Hynix’s total NAND Flash revenue in 2019.

Intel has been performing superbly in the enterprise SSD market. Intel is on par with Samsung in enterprise SSD. Intel captured more than 50 percent of the Chinese market. Enterprise SSD yields the highest profitability among the entire range of the company’s NAND Flash end-products.

All of SK Hynix’s current NAND Flash wafer inputs are located in South Korea, whereas Intel’s NAND Flash capacity is located in Dalian, China.

Among all NAND Flash suppliers, Intel is the most committed to the promotion of QLC architecture adoption, and QLC SSD is expected to occupy more than 30 percent of its NAND Flash bit output by the end of this year.

Intel insists on using Floating Gate technology in its 3D NAND Flash production. This technology is different from the Charge Trap technology used by other suppliers, including SK Hynix, meaning there is a significant difference in the etching processes between Intel and SK Hynix.

The acquisition of Intel’s 3D NAND Flash capacity will elevate SK Hynix’s competitiveness in the enterprise SSD market.

SK Hynix is projected to secure more than 20 percent of NAND Flash market share after it acquires Intel’s production capacity, surpassing second-place Kioxia and ranking SK Hynix right behind market leader Samsung.

However, it should be noted that this acquisition pertains only to Intel’s relevant 3D NAND Flash technologies and capacities and does not include its 3D-XPoint memory technology, which has recently received much attention in the market.