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Intel To Sell NAND Business To SK Hynix For Around $10B: Report

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Intel To Sell NAND Business To SK Hynix For Around $10B: Report

Intel Corporation (NASDAQ: INTC) shares were trading higher Monday afternoon in the wake of a report of a potential M&A deal.

What Happened: The company is nearing a deal to sell a memory-chip unit to South Korea’s SK Hynix Inc for roughly $10 billion, reports the Wall Street Journal, citing people familiar with the matter.

WSJ reports the U.S. chip maker has been weighing getting out of the business for some time, driven by sagging prices for flash memory.

Why It's Important: Intel’s NAND flash memory chips are used in portable storage devices like smartphones, tablets and solid-state drives.

KeyBanc Capital Markets analyst Weston Twigg notes Intel's NAND unit has posted negative segment operating margins over most of the last two years — though it turned profitable last quarter.

"Despite low margins, Intel's NAND business is relatively attractive within the industry, as it primarily sells to coveted datacenter customers, in our view. Intel operates just one large NAND facility in China, reflecting roughly 6-7% of global NAND output, by our calculations. In terms of valuation at $10 billion, we view the deal price as more than fair,” the analyst said in a note. 

What's Next: The two companies are in talks and the deal could be announced as soon as Monday, reports the WSJ.

INTC Price Action: Intel shares gained 0.78% Monday to end the session at $54.58.

The stock has a 52-week high of $69.29 and a 52-week low of $43.63.

 

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