The second leg of SK hynix’s deal to buy Intel’s solid-state memory business, which was largely built around a 3D NAND facility in Dalian, China, is set to close next year. The new owners are rumored to be considering taking Solidigm public in the U.S.
Image source: Solidigm
As the resource reminds Blocks & Filesthe first part of the deal announced in October 2020 involved the sale of SK hynix’s Dalian plant to Intel for $7 billion, which produced 3D NAND memory chips and solid-state drives based on them. The second stage of the deal involved the transfer in 2025 of Intel’s intellectual property and development staff in Dalian, as well as the former staff of the American company employed at the production facility in this city. For this, SK hynix must pay Intel another $2 billion next year. The core business that the Korean investors got from Intel has been operating under the name Solidigm for some time. Last quarter, according to Korean media, this company made a profit for the first time after 12 consecutive unprofitable quarters.
As is known, SK hynix itself intends to invest serious funds in the development of a production cluster in Yongin, South Korea. The construction of the first memory production facility at this site will start in March 2025 and will be completed in May 2027, it will require $6.8 billion in investments. Accordingly, the closing of the deal with Intel will force SK hynix to spend another $2 billion next year to pay the seller. According to rumors, SK hynix is considering a possible IPO of Solidigm in the United States in order to reduce its own capital expenditures at the expense of funds raised from investors. Representatives of SK hynix commented sparingly on these rumors: “Solidigm is considering various growth strategies, but no decisions have been made yet.”
Wedbush analysts believe that the recovery of Solidigm’s cash flows makes the company’s structural separation from SK hynix more likely. The success of the IPO venture, in their opinion, will largely depend on the structure of the asset separation, including technological development plans. At present, the Dalian plant, which Solidigm inherited from Intel, expects to master the production of 3D NAND memory with no more than 196 layers, which is not an advanced technological indicator.
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