Intel's Dalian Fab Officially Transferred to SK hynix
Intel has confirmed the transfer of its first fabrication plant located in China to SK hynix, thus marking the end of the company's NAND production business in that country. The transfer, as disclosed by the recent filings in China, marked the conclusion of a years-long deal that transferred ownership during a time of increased trade restrictions imposed by the United States.
Final Step in a $9 Billion Deal
The transfer marks the culmination of a $9 billion deal initiated in 2020 by which Intel agreed to sell its NAND business to the South Korean semiconductor giant. Documentation now shows that the facility has been renamed "SK Hynix Semiconductor (Dalian) Co., Ltd," confirming complete operational takeover by SK hynix.
Navigating New US Trade Restrictions
With this development, public uncertainty regarding the Dalian fab now disappears. Recently, the US withdrew VEU (Validator End-User) licenses to the facility, thus restricting the export of US equipment to that site without regulatory approval. Confusion was created when the US Commerce Department notice mentioned Intel's name, but with the official transfer completed, now it is clear that SK hynix will be the entity managing these new restrictions.
A Strategic Exit for Intel; A New Challenge for SK hynix
For Intel, the sale is a timeliness exit where the company manages to get a hefty price for the asset while eluding the brunt of the latest US regulations. On the flip side, this puts a lot of pressure on SK hynix. The Dalian fab, which is operated by its subsidiary Solidigm, plays an important role in its NAND production.
Should such restrictions be imposed on an easy upgrade of the facility with US equipment, SK hynix may find it hard to scale up production and manufacture state-of-the-art NAND technologies on Chinese soil, rendering the acquisition almost like a "massive burden."
What Happens Next
The next 120 days form a window before the full enforcement of the VEU license revocation. Whether it can come up with a solution for this concerning matter within this timeframe, such that its China business will not face conspicuous disruption, remains to be seen.
