As the semiconductor world starts to consolidate in the era of post-pandemic economic disruption, semiconductor giant Intel Corporation is looking to sell its memory business to South Korean manufacturer SK Hynix. At least that’s what the Wall Street Journal believes in a fresh report that surfaced roughly two hours after noon today, with the closing price of the transaction rumored to be in the range of $10 billion.
Intel’s Decision To Sell Memory Unit To SK Hynix Might Be Revealed On Monday Believe Sources
The deal surrounds Intel’s facility that it uses for manufacturing 3D NAND memory chips, and it follows an earlier report (also by The Journal) that suggested Intel’s rival in the personal computing and graphics processing industry AMD’s interest in acquiring Xilinx Corporation; an Ohio-based firm that specializes in manufacturing customizable. computer chips.
Intel’s 3D NAND plant is located in China, and as The Journal notes, should the company sell this facility to SK Hynix, then it will have significantly toned down its presence in the East Asian country that has managed to establish itself as the world’s manufacturing hub over the course of the last two decades. It would come as multinational firms seek to move their manufacturing presence away from China amidst growing trade tussles between it and the United States; tussles which have seen Chinese telecommunications firm Huawei Technologies Ltd. being added to the U.S. Department of Commerce’s Entity List.
By offloading its memory division, Intel will have gotten rid of a division that has struggled to improve its profits and margins. Dropping memory prices have made it difficult for Intel to maintain comfortable margins for its products, with the company’s primary competitor in the market Samsung Electronics having the luxury of being a South Korean conglomerate; a luxury that removes the need for Samsung to eke out high margins from every category of product that it sells.
Intel’s share price jumped after The Journal’s report was published today, as shareholders reacted favorably to the company offloading a struggling business unit. The Journal also believes that the transaction might be announced on the coming Monday, the week after Intel reports its earnings results for the third quarter of 2020. However, roughly an hour after the report was published, the shares are trading roughly in line with their value prior to the news being made public.
While its industry peers NVIDIA Corporation and AMD will focus on the growing demand for data center and artificial intelligence products through their acquisitions, Intel’s move does not involve gaining more ground in these markets. NVIDIA announced its decision to acquire British chip design house Arm last month, and the company’s co-founder and chief executive officer Mr. Jen-Hsun Huang provided the rationale behind the affair at Arm’s conference for application developers earlier.
According to Mr. Huang, the deal will allow NVIDIA to effectively target artificial intelligence applications and allow it to push its products to Arm’s diverse set of customers that include data center and supercomputer operators.
AMD’s rumored decision to acquire Xilinx will allow it to better compete with Intel through Xilinx adaptive computing platforms for the data center market. Demand for these platforms should grow as corporate spending in the sector rises, and Xilinx’s specialization in such products will provide AMD with a strong competitive edge in the future.
Intel’s deal to sell its memory division sill isn’t etched out in stone cautions The Journal so some caution is advised before taking things as being certain. Nevertheless, things will be clear soon given that the publication’s sources expect the deal to close by next week.
The post Intel Shares Soar & Drop Following Rumored $10 Billion NAND Flash Unit Sale To SK Hynix by Ramish Zafar appeared first on Wccftech.
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