British Regulators May Slowdown SK Hynix Acquisition of Intel's NAND Business

The United Kingdom's Competition and Markets Authority is probing the proposed acquisition of Intel's NAND and SSD businesses by SK Hynix. Regulators like the CMA usually investigate big transactions to ensure that they do not have any negative impact on local buyers and businesses. If the CMA believes that the takeover can somehow negatively affect customers in the U.K., it may slowdown the acquisition and make certain demands. 

At this point CMA is inviting concerned parties to comment on the proposed transaction between SK Hynix and Intel. The regulator expects to get the comments by May 11, when the phase 1 investigation is set to commence. 

"The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services" a statement by CMA reads. "To assist it with this assessment, the CMA invites comments on the transaction from any interested party." - CMA inquiry notice.

At present SK Hynix and Intel together control around 20% of the global NAND flash market, according to TrendForce. If SK Hynix manages to maintain this market share after it takes over Intel's NAND assets, it will become the world's second or third supplier of flash memory. Furthermore, the transaction will reduce the number of major NAND makers to five, which is better than an oligopoly with three DRAM vendors, but which still significantly reduces competition on the market. Whether or not any regulators would like to make certain demands for SK Hynix to approve the deal is something that remains to be seen, but this is certainly a possibility. 

Intel and SK Hynix expect regulators across the world to approve the transaction by the end of 2021. After the approvals are received, SK Hynix will pay Intel $7 billion for the latter's NAND and SSD businesses, which includes the fab in Dalian, China, IP, and employees. The deal is expected to finally close in March 2025, when SK Hynix pays Intel the final $2 billion for the remaining assets, including IP related to the manufacture and design of NAND flash wafers, R&D employees, and the Dalian fab workforce. Meanwhile, Intel will keep producing NAND flash at the fab until the final closure of the contract.