SK Hynix Gets China Approval For Takeover Of Intel’s NAND Business
South Korea’s SK Hynix
Inc said on Wednesday it has received merger clearances from the Chinese
antitrust authority for its acquisition of Intel Corp’s NAND
memory chip business, clearing the way for the world’s
second-largest memory chip maker to completion of securing regulatory approvals
from all eight countries.
The U.S. chip giant last October
agreed to sell its NAND memory chip business to SK Hynix for $9 billion, part
of a move to divest to focus on its smaller but more lucrative Optane memory
business which uses more advanced technology.
“SK Hynix
sincerely welcomes and appreciates the State Administration for Market
Regulation’s merger clearance for the deal. SK Hynix will
enhance its competitiveness of NAND Flash and SSD business by continuing the
remaining post-merger integration process,” the company
said in a statement.
China’s market
regulator said on Wednesday that it had approved the acquisition deal but with
conditions.
The concentration of the PCIe and
SATA solid state drive businesses after the acquisition will have or may have a
restrictive effect on competition in those markets, so additional conditions to
this deal are needed, China’s State Administration for Market
Regulation said in a statement.
Additional conditions include that
SK Hynix should not supply PCIe and SATA enterprise-class solid state drive
products to China’s domestic market at unreasonable
prices.
The Chinese regulator also said
Hynix should continue to expand its output of PCIe and SATA enterprise-class
solid state drive products within five years of the effective transaction date.
The deal is SK Hynix’s biggest
acquisition, as the Korean firm tries to boost its capacity to build NAND chips
which are used to store data in smartphones and data centre servers and to beef
up its pricing power.
Analysts said the deal will help SK
Hynix narrow the gap with market leader Samsung Electronics Co Ltd.
“China’s approval
comes a bit later than what the market expected, but this is in line with the
company’s goal of
receiving Chinese regulatory approval within this year,” said Park
Sung-soon, an analyst at Cape Investment & Securities.
“This
acquisition would likely help SK Hynix better expand its NAND solid state drive
(SSD) business for enterprise customers like data centres as its NAND SSD business
has been predominantly focus on consumer products such as smartphones and PCs” Park added.
SK Hynix shares closed up 2%,
outpacing the KOSPI’s 0.3% rise.