Summary
Intel Corporation announced on October 19, 2020, a significant divestiture of its NAND memory business to SK hynix Inc. for a total potential consideration of $9 billion. This transaction is structured in two closings: the first involves the sale of the Dalian, China NAND fabrication facility, the NAND solid-state drive business, and related assets for $7 billion cash, with the second closing for $2 billion cash to occur at a later date, contingent on the transfer of Intel's NAND technology and manufacturing business through newly formed subsidiaries. The company's Optane™ business is explicitly excluded and will be retained. This strategic move aims to streamline Intel's focus, particularly within its Non-Volatile Memory Solutions Group (NSG), which generated approximately $2.8 billion in revenue and $600 million in operating income from the divested NAND businesses in the first half of 2020. Investors should note the phased nature of the transaction, with the first closing not expected before November 1, 2021, and the second not before March 15, 2025. The company also plans to reclassify its financial reporting starting in Q1 2021, with Optane™ business being integrated into the Data Center Group (DCG) and NSG focusing solely on the retained NAND operations until the divestiture is complete. This divestiture represents a substantial strategic shift for Intel, signaling a move away from certain memory segments to better align with core competencies and future growth areas.
Key Highlights
- 1Intel is selling its NAND memory business, including the Dalian, China fabrication facility and NAND SSD business, to SK hynix for a total of $9 billion.
- 2The transaction will occur in two closings: the first for $7 billion cash (expected no earlier than November 1, 2021) and the second for $2 billion cash (expected no earlier than March 15, 2025).
- 3Intel's Optane™ business is NOT part of this sale and will be retained by Intel.
- 4The divested NAND businesses contributed approximately $2.8 billion in revenue and $600 million in operating income to Intel's NSG in the first six months of 2020.
- 5Intel plans to reclassify its financial reporting starting Q1 2021, moving Optane™ to the Data Center Group (DCG) and preparing NSG to reflect only the NAND businesses leading up to the divestiture.
- 6The deal is subject to customary closing conditions, including regulatory approvals (e.g., CFIUS, HSR Act, China) and other governmental clearances.
- 7Termination fees are stipulated for both parties under specific circumstances, with SK hynix potentially paying up to $350 million and Intel up to $140 million before the first closing.