Intel Corp agrees to sell Nand memory unit to SK Hynix for $9 billion

Intel Corp. agreed to sell its Nand memory unit to South Korea’s SK Hynix Inc. for about $9 billion, part of a broader effort by the U.S. chipmaker to concentrate on its main business.

The Asian company will pay 10.3 trillion won for the Intel unit, which makes flash memory components for computers and other devices. The acquisition, which will take place in stages through 2025, includes Intel’s solid-state drive, Nand flash and wafer businesses, as well as a production facility in the northeastern Chinese city of Dalian. Hynix’s shares rose as much as 4.8% Tuesday morning.

The deal will shore up the Korean corporation’s position in a business that’s boomed in the wake of Covid-19, which drove online activity and demand for internet computing. Hynix, Samsung Electronics Co. and Micron Technology Inc. together dominate the market for the memory chips used in everything from Apple Inc.’s iPhones to data centers.

Intel has said for months it was exploring options for the flash group. Hynix however won’t be buying the Optane division, which develops chips that can permanently store data and read and write it faster than NAND -- if not faster than traditional DRAM. The product, which went on sale in 2018, was tested successfully by some large cloud providers and Alibaba Group Holding Ltd. used the technology to support its massive Singles’ Day sales. Bob Swan, Intel’s chief executive officer, described Optane as “something special” last year.

The Korean company said it will pay Intel $7 billion before the end of 2021, then the rest by March 2025.

The acquisition also further streamlines Intel’s struggling empire. Since taking over in 2019, Swan has looked to sell several units that aren’t part of the company’s focus on processors for personal computers and servers.

The Santa Clara, California-based company has delayed production of important upcoming chip lines and now lags behind some industry players in manufacturing technology. Its shares are down about 9% so far this year, while the benchmark Philadelphia Semiconductor Index is up almost 29%.

Despite the delays, the company’s server group has been performing well. Shedding another non-core business could help Intel focus on fixing its chip technology woes.

Intel unloaded its smartphone cellular modem group to Apple in 2019 and this year sold its home connectivity chips group to MaxLinear Inc. In July, the company said it was considering moving away from manufacturing its own chips, potentially benefiting contract producers such as Taiwan Semiconductor Manufacturing Co. and Samsung.