UK's Competition and Markets Authority sticks probe in SK Hynix's $9bn proposed buy of Intel's NAND and SSD units
- Reference: 1619609407
- News link: https://www.theregister.co.uk/2021/04/28/cma_sk_hynix_intel_probe/
- Source link:
The competition regulator, a non-ministerial government department, is inviting interested parties to comment over the next fortnight or so on the proposed arrangement between the South Korean semiconductor biz and Chipzilla.
[1]
"The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result… in a substantial lessening of competition within any market or markets in the United Kingdom for good or services," [2]it said .
Comments must be received by 11 May, after which the CMA revealed it "formally commences" the "phase 1 investigation".
The $9bn purchase agreement between Intel and SK Hynix in [3]October envelops the NAND memory and storage business, including NAND SSDs, the NAND component and wafer business, and the Dalian NAND memory facility in China.
[4]
If signed and sealed, the buy would see SK leapfrog Kioxia as the world's second largest provider of flash memory behind Samsung, which accounts for roughly a third of global production.
Intel's NAND business generated around $2.8bn in revenue and $600m in operating profit during the first half of 2020.
Under the terms of the sale Intel is retaining the Optane business, the companies confirmed at the time.
[5]
The pair are expecting government approval in late 22021, at which point SK Hynix would buy the NAND SSD biz and the manufacturing site for $7bn. The remaining assets – IP related to the manufacture and design of NAND flash wafers, R&D staff, and the fab workforce – is scheduled to be bought for $2bn upon final closing of the sale, expected in March 2025.
This morning, [6]SK Hynix reported an 18 per cent year-on-year spike in revenue to 8.494 trillion won (£5.17bn/$7.17bn) for Q1 ended 31 March. Operating profit was up 66 per cent to 1.324 won (£646m/$897m).
The massive demand for semiconductors saw the company pull forward capital expenditure planned for 2022 to pay for chip making kit. ®
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/storage&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YImGnEUcotajLkw7UPpXegAAAJc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://www.gov.uk/cma-cases/sk-hynix-slash-intel-merger-inquiry
[3] https://www.theregister.com/2020/10/20/intel_sells_nand_business_to_sk_hynix/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/storage&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YImGnEUcotajLkw7UPpXegAAAJc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/storage&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YImGnEUcotajLkw7UPpXegAAAJc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://news.skhynix.com/sk-hynix-inc-reports-first-quarter-2021-results/
[7] https://whitepapers.theregister.com/
The greatest danger
The greatest danger is not any one specific merger or buyout, but that gradual conglomeration ultimately results in a single effective provider of any given device type. That position, while obviously maximally profitable for the provider, is a one of maximal fragility for the community at large.
Not having alternatives to fall back on is, however, becoming a societal norm. Communications convergence, for example, is eliminating resilience and excluding significant sectors of society (e.g. on the news this morning, 18% of the British public doesn't have reliable connectivity to the internet, while government in increasingly implementing "digital by default").
Ultimately, competition is useful in the technology manufacturing - it forces providers to ensure their products are both good and available. As we've seen in the OS arena, absence of real competition leads to provider complacency and poor products and services.
Does anyone care ?
I agree that this reduces competition, but why would Hynix and Intel care what the UK govt thinks ?
Re: Does anyone care ?
The Koreans and Americans wouldn't dare risk the displeasure of Global Britain
I tried corrections and nothing happened.
So 22021, twenty thousand years is slow even for a governmental department.