SK Hynix, a South Korean chipmaker, announced Wednesday that it has gained antitrust clearance from China for its $9 billion acquisition of Intel Corp's NAND and SSD (solid-state drive) businesses.
The certification sets the stage for the final step of obtaining regulatory license in eight jurisdictions, according to reports.
Last October, the U.S. chip giant agreed to offload its NAND memory chip business to SK Hynix as part of a strategy to focus on its smaller but more profitable Optane memory division, which employs more advanced technology.
SK Hynix got approval from monitoring agencies in the United States, the European Union, South Korea, Taiwan, the United Kingdom, Singapore, and Brazil following the agreement.
China's approval was the deciding factor in the Korean company's largest acquisition to date. However, China's watchdog imposed a variety of requirements, ranging from ensuring Hynix's pricing and supply to assisting a third party in "breaking into" the computer and server solid-state storage industry.
The acquisition will enable SK Hynix to accelerate the growth of its NAND SSD business and close the gap on market leader Samsung Electronics. Intel, on the other hand, claimed it will maintain the optane business in order to invest in more advanced technology.
Intel intends to sell its NAND flash memory business and focus on technology development, including 5G network infrastructure, artificial intelligence, and edge computing.
Additional conditions to this agreement are needed because the concentration of the PCIe and SATA solid state drive companies following the acquisition would have or may have a restrictive effect on competition in those sectors, according to China's State Administration for Market Regulation (SAMR)
Hynix and Samsung are spending billions on capacity expansion and technology upgrades, anticipating that the shift to higher-speed networking and linked gadgets would result in exponential demand growth. Intel, on the other hand, gets funds to put into its faster-growing logic businesses.
A representative for SK Hynix stated that the first payment of $7 billion will be made by the end of this year, and the remaining $2 billion will be paid by March 2025.
The South Korean chipmaker will take over Intel's NAND SSD, NAND component, and wafer businesses, as well as its NAND memory manufacturing plant in Dalian, after the acquisition is completed.
China's permission is a little later than the market expected, but Park Sung-soon, an analyst at Cape Investment and Securities, said it is in line with the company's goal of gaining Chinese regulatory approval this year.
According to Hynix Chief Executive Officer Lee Seok-hee, the acquisition will more than increase the company's flash-memory sales over the next five years.
