An Intel executive has announced that SK Hynix will not just absorb Intel's 3D NAND and SSD business after acquiring all the assets for $9 billion over the coming years but will actually run it as a standalone company headquartered in the U.S. The move might help Intel's storage business unit keep its existing US-based corporate and government customers after it changes hands.
UPDATE 8/6: The initial version of the story contained an incorrect statement about the initial ownership of the new company.
The newly-established company will get a new name, headquarters in the U.S., and will be headed by Robert Crooke, who is currently Intel's General Manager of NAND Products, the executive himself wrote over at LinkedIn (via CRN). The business entity will become a wholly-owned subsidiary of SK Hynix as soon as regulators approve its acquisition of Intel’s 3D NAND and SSD business and the South Korean company will make appropriate payments to the blue giant. While it will be a part of SK Hynix, it will maintain a certain degree of independence.
Intel's 3D NAND and storage business has always been focused primarily on server and enterprise storage (which is one of the reasons why the Intel–Micron joint venture broke down). In contrast, SK Hynix makes 3D NAND and storage solutions for virtually all types of devices that need non-volatile storage. To that end, instead of integrating Intel’s unit into SK Hynix and inevitably losing clients (especially those from the government) and market share, the South Korean giant will keep Intel's storage business as a separate entity.
Of course, it remains to be seen whether the newly established storage company will continue to develop its own 3D NAND memory and whether it will use SSD controllers designed by SK Hynix. Still, at least it will formally be a separate unit from the parent company.
In fact, the terms of the $9 billion transaction between Intel and SK Hynix are rather complex, so integrating Intel’s 3D NAND and storage assets into the South Korean company would probably be too complicated. After the companies get approvals from various regulators worldwide, 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. Yet, Intel will still not get the remaining $2 billion before the deal is finally closed in March 2025. This is when SK Hynix pays Intel $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 over three years from now.