China Grants Conditional Approval for SK Hynix's Acquisition of Intel NAND Business

China's State Administration for Market Regulation Proposes 6 Conditions Including Support for Third-Party Competitors
High Potential to Leverage Domestic SSD Technology Development

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Chinese media such as Sina reported on the 23rd that the State Administration for Market Regulation of China (hereinafter referred to as the Administration) has conditionally approved SK Hynix's acquisition of Intel's NAND flash business division.

[Image source=Reuters Yonhap News]

SK Hynix had agreed last October to acquire Intel's NAND flash business division, including the NAND flash memory manufacturing plant in Dalian, China, for $9 billion (approximately 10.7 trillion KRW). The Chinese government has been processing the approval procedure for SK Hynix's acquisition of Intel's NAND flash business division.

Sina cited the Administration's announcement on the 22nd, stating that while SK Hynix's acquisition of Intel's business division was approved, six proposals (conditions) must be complied with.

Sina reported that the six conditions presented by the Administration include sales price, capacity, procurement, and support for third-party competitors.

In the announcement, the Administration demanded that "one third-party competitor must be assisted to enter the enterprise-grade solid-state drive (SSD) market."

SSD is a storage device using NAND that is rapidly replacing hard disk drives (HDD), which use magnetic storage. The Intel fab (semiconductor manufacturing plant) located in Dalian, China, which SK Hynix plans to acquire, mainly manufactures SSDs for enterprise customers.

The Administration did not specifically mention who the 'third competitor' is, but it appears to refer to a Chinese company. This is interpreted as a requirement to assist Chinese companies in entering the SSD market.

Currently, YMTC under Tsinghua Unigroup is known as a company capable of manufacturing NAND in China. YMTC began mass production of 256GB-class NAND based on 64-layer 3D NAND in 2019, but still has a significant technology gap compared to Samsung Electronics and SK Hynix, resulting in minimal market share both inside and outside China.

However, the 'third competitor' mentioned by China is known to be a smaller company than YMTC. SK Hynix explained, "There is a company that wants to enter the enterprise SSD market by receiving high-spec NAND products, and we understand that this company wishes to continuously receive NAND supply from us," adding, "This does not mean that the technology held by us and Intel will be transferred."

The Administration also set conditions such as continuously expanding production at the Dalian plant for the next five years, prohibiting sales below the average price of the past 24 months as of the approval date (December 22, 2021), and supplying all products to the Chinese market.

The Administration further added that if SK Hynix violates the approval conditions, it will be dealt with according to antitrust laws.

Sina reported that with the Chinese government's approval, SK Hynix will initially pay Intel $7 billion, and upon paying the remaining $2 billion by March 2025, the entire contract will be completed.

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