SK Hynix Approved by China for Intel Business Acquisition... Stepping Stone to 2nd Place in NAND (Comprehensive Report 2)

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] SK Hynix has obtained approval from Chinese antitrust authorities for its acquisition of Intel's NAND flash business. With active support from SK Group Chairman Chey Tae-won, SK Hynix, which secured the most challenging approval from China during the acquisition process, is expected to quickly proceed with related procedures, strengthening its competitiveness in the NAND sector and solidifying its position as a memory semiconductor powerhouse alongside DRAM.

According to business circles on the 22nd, SK Hynix announced that it received approval from the State Administration for Market Regulation (SAMR) of China regarding the acquisition of Intel's NAND business. SK Hynix had consistently expressed its intention to obtain China's approval within the year. Accordingly, the approval process from antitrust authorities in eight countries required for the acquisition has been completed.

An SK Hynix official said, "We sincerely welcome this approval from SAMR," adding, "We will continue to proceed with the remaining processes and strengthen competitiveness in the NAND and SSD businesses."

SK Hynix signed a contract last October to acquire Intel's NAND business for $9 billion (approximately 10.3 trillion KRW) and has been undergoing approval procedures in eight countries. After receiving approvals from seven countries?including the United States, South Korea, Taiwan, the United Kingdom, the European Union (EU), Brazil, and Singapore?by July, concerns grew in the market that delays in China's approval could disrupt the acquisition process.

In particular, as the US-China conflict over semiconductor supremacy intensified and reports emerged that the import of extreme ultraviolet (EUV) lithography equipment to SK Hynix's Chinese factory was blocked due to US opposition, there were even suggestions that the acquisition of Intel's NAND business might fail. Recent cancellation of the MagnaChip Semiconductor acquisition also raised speculation about its impact on the approval decision.

However, SK Hynix overturned these concerns and is expected to further strengthen its NAND business. Having obtained approval from the Chinese government within the year as planned, SK Hynix intends to swiftly proceed with the remaining acquisition steps. Initially, it will pay $7 billion to secure the SSD business and assets of the Dalian factory in China, followed by a payment of $2 billion in March 2025 to acquire NAND wafer design and production-related IP, as well as operational personnel at the Dalian factory.

Once part of the acquisition process is completed, SK Hynix is expected to expand its NAND business based on a newly established company headquartered in the United States. In August, Robert Crooke, Intel's Vice President, announced on his social network service (SNS) that "a new company headquartered in the US will be established," and that he would serve as the CEO of that company. SK Hynix has already established more than ten subsidiaries worldwide, including in the US, to handle NAND sales and related operations this year.

According to market research firm TrendForce, SK Hynix held a 19.3% share of the NAND market in the third quarter of this year, ranking third, while Intel held 5.9%, ranking sixth. Combined, their share amounts to 25.2%, surpassing Japan's Kioxia (19.3%) and positioning them as the industry's second-largest player after Samsung Electronics (34.5%).

Meanwhile, Chairman Chey’s role was reportedly significant in securing China's approval for SK Hynix. Chairman Chey has supported SK Hynix's review approval by leveraging networks built over many years in the Chinese government and political and business circles through hosting or participating in various forums in China annually. In September, Chairman Chey appointed Vice Chairman Seo Jin-woo as head of China business and sent him to China to persuade Chinese officials. Previously, during the 2017 investment in Japan's Kioxia, Chairman Chey personally visited China to emphasize the necessity of the investment during the approval review process.

Vice Chairman Park Jung-ho, who took office as SK Hynix CEO in March this year, is also reported to have actively promoted the necessity of the Intel NAND acquisition to domestic and international market stakeholders by leveraging his previous experience and expertise in mergers and acquisitions while leading the Intel NAND acquisition team.

This content was produced with the assistance of AI translation services.