SK Hynix's Acquisition of Intel Business Approved by China with Conditions to "Supply Products and Assist Competitors"

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[Asia Economy Reporter Jeong Hyunjin] The Chinese government has approved SK Hynix's acquisition of Intel's NAND flash business division, attaching conditions to ensure the 'stable supply of products within China' and to 'facilitate market entry for other competitors.'

According to data from the State Administration for Market Regulation (SAMR) of China on the 23rd, SAMR granted a conditional antitrust approval for SK Hynix's acquisition of Intel's NAND and solid-state drive (SSD) business division the previous day, imposing six conditions.

The first condition prohibits supplying PCIe enterprise-grade SSD products and SATA enterprise-grade SSD products to the Chinese market at unfair prices. When selling these products in China under similar contract conditions, prices must not exceed the average price of the 24 months prior to the effective date. Additionally, for five years from the effective date, SK Hynix must continuously expand production of PCIe enterprise-grade SSD and SATA enterprise-grade SSD products and continue supplying all products to the Chinese market under principles of fairness, reasonableness, and non-discrimination.

Furthermore, SAMR stipulated that neither SK Hynix nor any company controlled by SK Hynix may force customers in the Chinese market to purchase products exclusively. It also prohibits entering into written or oral agreements that exclude or restrict competition from third-party competitors in the PCIe enterprise-grade SSD and SATA enterprise-grade SSD markets or Chinese companies. The restrictive conditions may be lifted if the company applies to the Market Regulation Administration after five years from the effective date.

This set of conditions from China contrasts with the 'unconditional' approvals previously granted by the UK, the European Union (EU), Singapore, and others for SK Hynix's acquisition of Intel's NAND business division. Amid the global semiconductor supply disruptions caused by the global semiconductor hegemony battle, China appears to have established these conditions to secure semiconductors stably in terms of supply and price within its territory, while considering the high entry barriers and industrial characteristics to expand its domestic semiconductor industry.

Kim Yangpaeng, a senior researcher at the Korea Institute for Industrial Economics and Trade, said, "It seems to be a comprehensive consideration of the fact that SK Hynix operates factories in China and that the proportion of semiconductor production in China is significant," adding, "It can be interpreted as a decision reflecting urgency to resolve supply chain instability."

After signing the acquisition contract last October, SK Hynix has obtained approvals from eight countries within 14 months and plans to swiftly proceed with the remaining acquisition processes. Initially, SK Hynix secured the SSD business and assets of the Dalian factory in China by paying $7 billion (approximately 8.3 trillion KRW), and by March 2025, it will pay $2 billion to acquire IP related to NAND wafer design and production, as well as the operational workforce of the Dalian factory.

Once part of the acquisition is completed, SK Hynix is expected to expand its NAND business based on a newly established company headquartered in the United States. This year, SK Hynix has already established more than ten subsidiaries worldwide, including in the U.S., to handle NAND sales. Robert Crook, Vice President in charge of Intel's NAND business division, shared the news of China's approval on his social network service (SNS) on the same day, stating, "We have taken one step closer to completing the acquisition. Please stay tuned."

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