SK hynix may take former Intel flash memory business public

Next year, the second part of SK hynix’s deal to buy Intel’s solid-state memory business, which was primarily built around a 3D NAND plant in Dalian, China, is due to close. According to rumors, new business owners are considering the possibility of introducing Solidigm to the American stock market.

Image source: Solidigm

As the Blocks & Files resource reminds, the first part of the deal announced in October 2020 involved the sale of SK hynix for $7 billion to an Intel plant in Dalian, 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 the intellectual property and development staff of Intel in Dalian, as well as the former personnel of the American company employed in production in this city. For this, SK hynix must pay Intel another $2 billion next year. The core business that Korean investors inherited from Intel has been operating under the name Solidigm for some time. Last quarter, according to Korean media, the company made a profit for the first time after 12 consecutive unprofitable quarters.

As is known, SK hynix itself intends to invest heavily in the development of a production cluster in Yongin, South Korea. Construction of the first memory production plant at this site will start in March 2025 and end in May 2027; it will require $6.8 billion in investment. Accordingly, closing 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 for Solidigm in the United States in order to reduce its own capital costs using raised funds from investors. Representatives of SK hynix commented sparingly on these rumors: “Solidigm is considering various growth strategies, but no decisions have been made yet.”

Analysts at Wedbush believe that the recovery in 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 division of assets, including technological development plans. At the moment, the enterprise in Dalian, which was acquired by Solidigm from Intel, expects to master the production of 3D NAND memory with no more than 196 layers, which cannot be called an advanced technological indicator.