News It's Official, Intel Sells NAND Fabs, SSD Business to SK hynix for $9 Billion

[Admin]

Intel has sold its Dalian fab and NAND and storage business to rival chip giant SK hynix for $9 billion.

It's Official, Intel Sells NAND Fabs, SSD Business to SK hynix for $9 Billion : Read more

 

[PeterDru]

The sale includes Intel's Dalin fab in China, but the deal's final step won't complete until March 2025. In the meantime, Intel will still manufacture NAND wafers at the Dalian facility.

Are there two fabs in two places, one in Dalin and another in Dalian? Or it is an orthographic error?
Russians controlled the area around 1900 and build the city as Dal'nii (from proto-Slavic word, that means "far-away'). Later Japan controlled the area and wrote the name as "大連" using traditional characters, that is pronounce as "Dairen" in Japan. Now it is written as "大连" in simplified characters and "Dàlián" in pinyin that is the official romanization system for the Standard Chinese. Therefore the name of Dalian city ends with 'lian'.

 

[DZIrl]

Time for XMas bonus but company is not selling much and high management found way how to get bonus. Bravo!

 

[Endymio]

Intel divesting itself of Chinese production fabs...smart move.

 

[TerryLaze]

Let's hope that this means that intel will push optane hard as soon as this deal completes.

 

[Chung Leong]

Good. Intel can use the proceeds to invest in an fab on American soil.

 

[InvalidError]

Let's hope that this means that intel will push optane hard as soon as this deal completes.

It'll push Optane hard in markets willing to pay big bucks for it. If your "push hard" was in hopes of becoming affordable, that would be antithetical to the reason Intel is getting rid of plebeian NAND in the first place. With Intel being in a duopoly position with Micron there, it won't be in any hurry to drive prices down.

 

[JamesSneed]

Intel is just making its 4th quarter numbers look better as AMD is set to destroy them. Intel will look great on paper at least for another quarter. Its a smart move if Intel can get competitive by the time the luster wears off but I have my doubts

 

[spongiemaster]

Intel is just making its 4th quarter numbers look better as AMD is set to destroy them. Intel will look great on paper at least for another quarter. Its a smart move if Intel can get competitive by the time the luster wears off but I have my doubts

How would this have any affect on their 4th quarter numbers?

 

[dalek1234]

How would this have any affect on their 4th quarter numbers?

Intel is currently in its 4th fiscal quarter.

In the previous reported quarter, Intel made 19 billion USD of revenue. Let's say that it will continue to make 19 billion in Q4 , with the 9 billion sale quoted in this article, it means that Intel will make 28 billion worth of revenue in q4 - a considerable increase. So the financial numbers for q4, and the entire 2020, will look better than they actually are.

It is entirely possible, that the q4 number are expected to be so bad, that the sale of 9 billion to Hynix is just to make up for the shortcomings. We will know in about 3 months when Intel reports on q4.

 

[Endymio]

Intel is currently in its 4th fiscal quarter. ..with the 9 billion sale quoted in this article, it means that Intel will make 28 billion worth of revenue in q4 - a considerable increase.

Except that Intel won't receive even the first payment from this sale until late 2021 ... and final payment not until 2025. The sale isn't even approved yet by regulators.

 

[Soaptrail]

The low-margin storage business doesn't fit well with Intel's company goals of operating at a ~60% margin.

Are 60% profit margins normal for this industry or sector? If so i presume it has to do with needed to fund a lot of R&D.

 

[JamesSneed]

How would this have any affect on their 4th quarter numbers?

My bad, 2021 4th quarter. If 2021 is going to go as bad as I think then around 3rd or 4th quarter 2021 Intel is going to feel some pain. This first payment will help make up for lost revenue and hide the bleeding. They just need to mask it until they can get 7nm EUV up and going in mass production. Its a smart play for NAND business that has every reducing margins.

 

[dalek1234]

Except that Intel won't receive even the first payment from this sale until late 2021 ... and final payment not until 2025. The sale isn't even approved yet by regulators.

Thanks for pointing that out. I read the article elsewhere originally and it didn't have any of the payment date info.

 

[spongiemaster]

My bad, 2021 4th quarter. If 2021 is going to go as bad as I think then around 3rd or 4th quarter 2021 Intel is going to feel some pain. This first payment will help make up for lost revenue and hide the bleeding. They just need to mask it until they can get 7nm EUV up and going in mass production. Its a smart play for NAND business that has every reducing margins.

Would any investor actually be fooled by that strategy? Rumors are already swirling that Intel is going to delay Ice Lake SP until Q1 next year, not that anyone really expected volume shipping in q4 if this is true. Enterprise is where Intel makes its money. So long as Intel can get IL-SP out the door successfully in early 2021, their financials will be fine. If Intel can then convince people Sapphire Rapids will in fact be released in late 2021, it doesn't really matter what happens on the desktop, it won't be negatively reflected in Intel's financials.

 

[JamesSneed]

Would any investor actually be fooled by that strategy? Rumors are already swirling that Intel is going to delay Ice Lake SP until Q1 next year, not that anyone really expected volume shipping in q4 if this is true. Enterprise is where Intel makes its money. So long as Intel can get IL-SP out the door successfully in early 2021, their financials will be fine. If Intel can then convince people Sapphire Rapids will in fact be released in late 2021, it doesn't really matter what happens on the desktop, it won't be negatively reflected in Intel's financials.

Investors could be fooled especially as Intel doesn't look bad on fundamentals. I bet they can keep this charade going a 3-4 more quarters. If AMD's Ryzen chips are as good as they say EPYC is going to have even larger lead on Intel. I have a feeling Intel's server marker share starts to fall fast by mid 2021. Intel just said on there call today they plan to be back in product leadership by 2023. Basically if you have any clue you dump there stock soon watch it slowly wither for the next two years. If Intel's stock hits around early 2009 prices in the next year or two I will pick some up.