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In 2016, Intel’s Memory Solutions Group Vice President Rob Crook speaks at a production kick-off ceremony held at a three-dimensional (3D) NAND flash memory factory in Dalian, China. Provided by Intel
On the 20th, SK Hynix signed a contract to acquire Intel’s NAND flash and SSD (data storage device) business for $ 9 billion (about 1.12 trillion won). The share price fell 3.2% until the 23rd after news of the acquisition was announced. This is because the analysis that ‘K Hynix gave and bought dear’ was dominant. SK Hynix ripped off Intel?
Acquisition of Intel by SK Hynix. Hankyung DB
Dalian plant production capacity of 100,000 pieces per month, worth about 10 billion won
The most talked about is the value of Intel’s plant in Dalian in China, acquired by SK Hynix. The plant’s production capacity is 82,000 wafers per month (82K). Some of the ‘144 layer’ NAND products, which are widely used in today’s market, are reported to be mainly 64- and 96-layer products, and are currently in mass production. The cost for a semiconductor company to ensure a production capacity of 80,000 sheets per month is estimated to be about 10 trillion won. Considering this alone, the assessment that it is not a “bottom line” prevails.
There is something to consider. Intel’s Dalian plant is an old facility that was fully operational in 2010. In particular, there are many analyzes that “SK Hynix will have to invest an additional trillion won in the Dalian plant”, as the production method Intel’s NAND is a “floating gate” that it says is “outdated.” SK Hynix is currently producing 3D NAND using the ‘CTF’ method instead of a floating gate.
SK Hynix also does not deny the possibility of additional investment in the Dalian plant. However, SK Hynix disagrees that the “floating door” method will be a weakness. This is because, as Intel, which adhered to the floating gate method, said several times, “it can increase the density without wasting space and it is more stable than CTF.” In fact, Intel stuck to the floating gate method even when it developed the ‘144-layer’ NAND, which is currently called the highest number of stacked layers. An SK Hynix official explained: “You can say that the portfolio has diversified with Floating Gate and CTF.” He added: “Although additional investment may be required in the Dalian plant, investment in facilities and installations is a natural phenomenon in the semiconductor industry.”
Can absorb Intel SSD technology which cannot be easily obtained
SK Hynix’s weakness is its SSD business, which is considered the “next generation food” in the NAND flash market. SSD is a storage device manufactured by connecting multiple NAND flashes. In particular, the ‘Enterprise SSD’ is considered a key component of the data center servers operated by Google, Amazon and Facebook. The global market is expected to grow from $ 10.5 billion (about 12 trillion won) last year to $ 30.7 billion (about 35 trillion won) in 2024 due to the spread of the ‘economy domestic ‘after the spread of the new coronavirus infection (Corona 19).
SK Hynix’s corporate SSD market share is 7.1% (in Q2), much lower than that of Samsung Electronics (34.1%). The weaker “solution” technology to develop NAND as SSD is considered the main cause. It is analyzed that it entered the NAND flash business six years after Samsung Electronics, and that the 2008 financial crisis had a major impact on production cuts and investment reductions.
The Intel acquisition is seen as a card that can reverse SK Hynix’s weaknesses at once. Intel’s position in enterprise SSDs is even stronger. Intel ranks second (29.6%) in the enterprise SSD market based on the technology of its solution accumulated during the development of the central processing unit (CPU). When combined with SK Hynix (7.1%), it surpasses Samsung Electronics (34.1%) and rises to ‘No. 1 in the world. ‘
Unlike the Dalian plant in the stock market and semiconductor industry, Intel’s ‘enterprise SSD’ value is in an atmosphere of recognition. Of course, in the process of acquiring SK Hynix, there is a possibility that the core Intel staff will leave. This is the great task of SK Hynix. Still, the analysis prevails that just bringing the patents and accumulated knowledge back into the company will fuel SK Hynix’s SSD business.
Competitors are concerned about ‘Intel SK Hynix’ honeywall
In the press release for ‘DDR5 Next Generation DRAM development,’ SK Hynix recently revealed: “We are closely cooperating with partners such as Intel and DDR5.” Additionally, the CEO of SK Hynix is Chairman Seok-hee Lee, who has been rated “the best process expert” while working for Intel for 10 years. In this situation, as SK Hynix and Intel signed a contract worth 10 trillion won, it is anticipated in the semiconductor industry that “the close relationship between the two companies will continue for a considerable period of time.”
Lee Seok-hee, CEO of SK Hynix, who left Japan in July last year during the Japanese semiconductor export regulation. President Lee worked at Intel headquarters in the US from 2000 to 2010 and was rated “Top Tech Expert.” Hankyung DB
This is what our competitors fear most. Although its status is gradually declining, Intel remains the world’s number one selling company in the semiconductor market and dominates the CPU market. In particular, for DRAM makers to open up the market for next-generation DRAM like DDR5, Intel must develop and release a CPU for DDR5. Collaboration is essential. Hwang Min-sung, an analyst at Samsung Securities (Director), said: “What is important is the synergy effect that can occur between the two companies,” he said. . In fact, the fact that Intel recommended SK Hynix to buy ‘Optano’ was reported on the 23rd of ‘Market Insight’, a specialized media market in the Korea Economic Daily (“Write a little more” … Intel suggests sell ‘Optano’ to SK Hynix was confirmed).
In conclusion, it cannot be said that SK Hynix spent 10 billion won “I bought it cheap”. That said, it’s too early to assess that he was “ upset. ” There are many analyzes that there is plenty of room to be evaluated as “a lot” a few years later. Representative examples include strengthening the competitiveness of corporate SSDs, expanding collaboration with Intel, and rising to the second-largest market share of NAND flash. The success or failure of this contract will appear in a few years. It all depends on SK Hynix.
Reporter Hwang Jeong-soo [email protected]
