Intel is exiting the flash memory and storage business by selling its SSD business to SK Hynix. The deal is worth $9 billion. Although the chip giant will keep its high-end Optane memory technology.
The deal involves Intel’s former NAND SSD, part, and wafer companies. It also includes Intel’s NAND manufacturing unit in Dalian, China. Intel CEO Bob Swan said that this transaction would allow them to prioritize investments in differentiated technology and play a big role in customer’s success and provide attractive returns to their stockholders.
Per-bit NAND prices decline, profitability suffers leading Intel to move away from the SSD business
Per-bit NAND prices have declined as time passed. Hence, a laptop with a 1TB solid-state drive is cost-effective today. With manufacturing NAND chips, the per-bit costs should ideally decline as quickly as per bit prices.
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Memory chip manufacturer Micron also experienced a 47% decline in per-bit NAND prices in the fiscal year 2019 as compared to 2018. The year before it saw Micron suffered a price drop by 13%. Hence profitability suffers, making it a tough business leading Intel to move away from it.
After selling its SSD business, Intel to use the funds for long term growth initiatives
The deal will not be finalized until late 2021. Both companies are in the process of getting government approval for the acquisition. Until then, Intel will produce the NAND stock on the Dalian manufacturing unit and keep its IP rights.
As the NAND business sale goes through, Intel plans to use these funds to invest in long-term growth initiatives. Presently, it would mainly focus on protecting its share in the PC and server chip markets from AMD.
Chip giant to refocus on core chipmaking and data center business
Exiting NAND will help the chip giant in prioritizing the core of its business. It can shift its focus on core chipmaking and data center business. Last year, Intel also sold its 5G business to Apple. The deal was finalized for $1 billion.