© TrendForce Analysis | October 21, 2020
SK Hynix holds second highest NAND market share via acquisition of Intel’s NAND capacity
SK Hynix has announced today (Oct. 20) that it will acquire Intel’s NAND Flash business and Dalian-based Fab 68, which is dedicated to 3D NAND Flash production, for USD 9 billion.
In accordance with regulatory laws and policies, SK Hynix will apply for permission from governments in China, the U.S., and South Korea, with the acquisition expected to conclude in March 2025. TrendForce indicates that the merger between Intel’s NAND Flash business and SK Hynix will allow the latter to benefit from the complementary technologies, especially in the enterprise SSD market. Broadly speaking, this marks the next chapter of reorganisation for the NAND Flash industry. According to data compiled by TrendForce, SK Hynix and Intel occupied 11.7% and 11.5% market shares, in terms of revenue, in the NAND Flash market in 2Q20, placing the two companies in fourth and sixth places, respectively. In terms of product competitiveness, SK Hynix has an advantage in the mobile market, including eMCP and eMMC products, accounting for more than 60% of SK Hynix’s total NAND Flash revenue in 2019. On the other hand, Intel has been performing superbly in the enterprise SSD market. Not only is Intel on par with Samsung in enterprise SSD, but it has also captured more than 50% of the Chinese market. Enterprise SSD yields the highest profitability among the entire range of the company’s NAND Flash end-products. The acquisition will have a complementary effect on SK Hynix’s technologies and bolster its enterprise SSD range In terms of production capacity, all of SK Hynix’s current NAND Flash wafer inputs are located in South Korea, whereas Intel’s NAND Flash capacity is entirely located in Dalian, China. Among all NAND Flash suppliers, Intel is the most committed to the promotion of QLC architecture adoption, and QLC SSD is expected to occupy more than 30% of its NAND Flash bit output by the end of this year. From a technology perspective, Intel insists on using Floating Gate technology in its 3D NAND Flash production. This technology is vastly different from the Charge Trap technology used by other suppliers, including SK Hynix, meaning there is a significant difference in the etching processes between Intel and SK Hynix. The acquisition of Intel’s 3D NAND Flash capacity will massively elevate SK Hynix’s competitiveness in the enterprise SSD market. Going forward, it remains to be seen how the two companies will optimize their product portfolios following the acquisition in order to maximize profits. SK Hynix is projected to secure more than 20% of NAND Flash market share after it acquires Intel’s production capacity, in turn surpassing second-place Kioxia and ranking SK Hynix right behind market leader Samsung. However, it should be noted that this acquisition pertains only to Intel’s relevant 3D NAND Flash technologies and capacities and does not include its 3D-XPoint memory technology, which has recently received much attention in the market.