SK Hynix’s Intel NAND business acquisition has received Chinese approval from Reuters on terms

By Heekyong Yang and Sophie Yu

SEOUL (Reuters) – South Korea’s SK Hynix Inc said on Wednesday it had received merger permits from its Chinese antitrust authorities to buy it. Intel Corp. (NASDAQ:) ‘s NAND memory chip business paves the way for the world’s second-largest memory chip manufacturer to secure regulatory approval in eight countries.

The US chip giant agreed last October to sell its NAND memory chip business to SK Hynix for $ 9 billion as part of a move to invest in a smaller but more profitable Optane memory business that uses more advanced technology.

“SK Hynix sincerely welcomes and appreciates the State Administration of Market Regulation’s permission to join the agreement. SK Hynix will improve the competitiveness of the NAND Flash and SSD business by continuing with the rest of the post-merger integration process,” the company said in a statement.

The Chinese market regulator said on Wednesday that it had accepted the purchase deal but with conditions.

The acquisition of PCIe and SATA solid state drive business concentrations after the acquisition will or may have a restrictive effect on competition in these markets, so additional terms are required for this agreement, the Chinese State Administration for Market Regulation said in a statement.

One of the additional requirements is that SK Hynix will not supply PCIe and SATA enterprise-class solid-state products to the Chinese domestic market at unreasonable prices.

The Chinese regulator also said that SK Hynix should continue to expand production of PCIe and SATA business-class solid state drive products within five years of the effective date of the transaction.

SK Hynix should not compel customers in the Chinese market to purchase products exclusively from SK Hynix or its subsidiaries, nor in its dealings with Chinese competitors that exclude or reduce competition.

The deal is the largest acquisition by SK Hynix, as the Korean company seeks to build NAND chips used to store data on smartphones and data center servers and increase its pricing power.

“It has been speculated that it will be difficult for SK Hynix to gain approval for China’s agreement or that any approval could be significantly delayed given the complex situation … between tensions between the United States and China in the semiconductor sector.

“It seems that approval can be reached at the right time without much delay, as they believe the agreement will benefit all three countries,” SK Hynix said.

Analysts say the deal will help SK Hynix narrow its gap with market leader Samsung Electronics (OTC 🙂 Co Ltd.

“China’s approval comes a little later than expected by the market, but this year is in line with the company’s goal of gaining approval for Chinese regulations,” said Cape Sung-soon, an analyst at Cape Investment & Securities.

“This acquisition is likely to help SK Hynix expand its NAND solid state drive (SSD) business for business customers such as data centers, as its NAND SSD business is primarily focused on consumer products such as smartphones and computers,” he added. du Parkek.

Shares of SK Hynix were up 2%, up 0.3%.