Intel Corp. on Wednesday announced the first closing of the $9 billion sale of its flash business to SK hynix Inc., a leading memory chip manufacturer.

The first closing completes one of the acquisition’s two major phases. The milestone comes after China’s State Administration for Market Regulation approved the transaction on Dec. 22. The second phase of the acquisition, known as the final closing, is expected to occur in 2025.

As part of the first closing announced on Wednesday, South Korea-based SK hynix has provided Intel with $7 billion of the acquisition’s $9 billion price tag. In exchange, SK hynix received Intel’s solid-state drive business and its NAND memory manufacturing facility in Dalian, China. SK hynix also acquired certain related intellectual property.

Some of the workers at Intel’s former SSD business have joined SK hynix. A number of employees focused on product development and the workforce at the Dalian memory manufacturing facility will join SK Hynix once the transaction’s final close occurs in 2025. That’s also when Intel will receive the remaining $2 billion of the acquisition’s $9 billion price tag.

Until the final close, Intel will continue to produce NAND wafers at the Dalian facility. The company will also retain certain memory-related intellectual property that will be transferred to SK hynix once the acquisition wraps up in 2025.

SK hynix, meanwhile, plans to turn the SSD business that it obtained on Wednesday following the deal’s first close into a subsidiary called Solidigm. The subsidiary will be headquartered in San Jose, California, and is set to have a workforce of 2,000 employees. It will be led by Robert Crooke, the former senior vice president and general manager of Intel’s Non-Volatile Memory Solutions Group, which included the SSD business.

SK hynix said that Solidigm will complement its existing flash memory unit. Until now, the company was primarily known as a maker of SSD products for mobile devices. Through the acquisition of Intel’s former SSD business, SK hynix has gained a stronger presence in the enterprise segment of the flash market.

As for Intel, reducing its presence in the flash chip business will enable the company to double down on its core focus area: the processor market. Intel is facing growing competition from rival processor makers such as Advanced Micro Devices Inc., which has significantly increased its market share in both the server and personal computer chip segments over recent years.

To address the growing competition, Intel is upgrading its semiconductor production facilities to a newer 7-nanometer manufacturing process. Chief Executive Officer Pat Gelsinger has said that the company aims to ship its first seven-nanometer central processing units for desktops and servers in 2023. The chips are expected to provide 20% higher performance per watt than the company’s current generation silicon. 

Further down the line, Intel plans to switch its chips to a new, more sophisticated transistor design known as a gate-all-around architecture. Gate-all-around transistors can be optimized for different use cases to increase performance and efficiency. 

In parallel, Intel is building two new chip factories at a cost of $20 billion in Arizona. The company plans to use extreme ultraviolet lithography, or EUV, machines from ASML Holding NV to produce its next-generation chips. EUV machines, which use beams of laser light to carve transistors into silicon wafers, reportedly cost about $150 million apiece. 

The proceeds from Intel’s sale of its flash business should help boost its plans in the processor market. “As previously disclosed, Intel intends to invest transaction proceeds to deliver leadership products and advance its long-term growth priorities,” the company stated.

Though Intel is exiting the flash business, the company will continue to have a presence in the nonvolatile memory market with its Optane product line. The Optane line consists of high-speed memory modules designed for performance-intensive tasks, such as caching frequently accessed data so that it may be retrieved faster by applications.  

Image: Intel