SK Hynix CEO denies $9 bn Intel memory buyout is overpriced given long-term outlook

SK Hynix Inc.'s $9 billion buyout of Intel Corp.'s NAND business is not overpriced, given the added value of Intel's memory storage solutions and the deal's contribution to raising South Korea’s chip power, SK Hynix chief said.

“Some see the $9 billion deal as exorbitant, but I don't see the price as being too high,” said Lee Seok-hee, chief executive of the South Korean chipmaker, in an exclusive interview with Maeil Business Newspaper on Wednesday.

This was Lee’s first media interview since SK Hynix made headlines Tuesday by announcing the biggest acquisition in Korean corporate history. The deal includes all of the American chip giant’s NAND flash business, including solid state drive, NAND flash memory and wafer operations, as well as its fab in Dalian, China.

The addition would push SK Hynix from fifth to second in global NAND rankings, narrowing the gap with market leader Samsung Electronics Co.

Lee said the price concerns appear to be stemming mostly from Intel’s Dalian fab but that the deal overall was a "fair valuation."

Some critics have called the valuation of the Chinese factory too high, given its outdated facilities, rising labor costs in China and the ongoing U.S.-China trade frictions.

Lee also saw the deal as reaffirming Korea’s global status as a memory chip powerhouse.

Samsung Electronics and SK Hynix are already the world’s top two DRAM makers, commanding more than 70 percent of global supplies. With the Intel buyout, SK Hynix would also rank No. 2 in NAND flash, with a market share of nearly 20 percent, and together with Samsung claim more than half of the global NAND market.

This would further galvanize Korea’s semiconductor industry and fuel the growth of material, component and equipment suppliers, Lee said.

Industry outlook remains strong, Lee added, as global demand for memory chips would continue to grow to power new technologies including big data, artificial intelligence, 5G and autonomous driving.

Lee said the biggest asset of the deal is Intel’s “solution development and engineering capabilities.”

“Intel’s solution knowhow makes it an unrivaled force in the enterprise solid state drive (eSSD) market, an invaluable asset that is likely to keep its value for the foreseeable future,” Lee said.

Intel is regarded as a global leader in NAND flash solutions, with advanced technologies in controller and firmware software.

The global eSSD market is a huge market worth an estimated 12 trillion won ($10.6 billion) that is seeing booming demand from big tech companies including Google, Amazon and Facebook to power their data center servers.

Lee credited the Intel deal to SK Group Chairman Chey Tae-won, saying that Chey’s leadership was pivotal throughout the acquisition process.

[ㄏ Maeil Business Newspaper & mk.co.kr, All rights reserved]