SK Hynix in talks with Intel about deal to make memory chips in US for the first time, sources say
The deal could run into opposition from the South Korean government.
SK Hynix is reportedly negotiating with Intel to manufacture memory chips in the United States for the first time ever, according to three sources familiar with the discussions. One possibility involves SK Hynix leasing a portion of Intel's planned chipmaking facility in Ohio, while another scenario could entail a joint venture with Intel and major cloud companies to secure memory chip supplies.
The deal would provide a much-needed boost to Intel, a company grappling with challenges, and would also serve as a significant victory for the Trump administration, which has been pushing chipmakers to establish operations in the United States amid a rising shortage of memory chips driven by growing demand for AI and data center infrastructure.
However, the prospect of SK Hynix producing chips in the U.S. may face resistance from Seoul, a major hurdle in the negotiations. The talks, described as exploratory by one of the sources, emphasize that no decisions have been finalized, and SK Hynix may explore various alternatives for structuring the deal. Intel's stock saw a 5.5 percent increase, while SK Hynix's stock increased by 4.1 percent on September 16.
The specific types of chips that SK Hynix may produce in Ohio remain undisclosed, as Reuters was unable to determine this information. The South Korean government might raise concerns about the potential deal due to certain technologies being deemed sensitive.
SK Hynix has stated that it is reviewing various measures, including establishing additional production bases, to enhance the competitiveness of its memory business, but no decisions have been made at this stage. The company's statement also revealed that no agreements regarding cooperation with specific companies or memory chip production in the United States have been finalized.
Intel declined to comment on the speculation and reiterated that it is continuing with investments in Ohio to prepare the site. South Korea's trade ministry stated that any decision regarding a potential SK Hynix plan to produce chips in the U.S. would be at the company's discretion, subject to review under the Industrial Technology Protection Act if it involves "national core technology."
U.S. Commerce Department did not respond to a request for information. Despite the higher costs associated with manufacturing semiconductors in the U.S. compared to South Korea, driven by factors such as labor and construction expenses, as well as the industry's supply chain primarily being located in Asia, SK Hynix, recently completing a secondary listing on the Nasdaq in July and currently constructing a chip packaging facility in Indiana, sees the potential benefits of producing chips in the United States.
SK Hynix's chairman, Chey Tae-won, emphasized the company's need to build a factory in the U.S. following mounting pressure and lobbying from customers and countries. Intel's investment in the Ohio facility, which was initially scheduled for completion by 2025, has been delayed to 2030 and 2031. Balancing the interests of both Washington and Seoul may prove challenging, particularly as both SK Hynix and rival Samsung Electronics are urged by the South Korean government to expedite plans for a new cluster of chipmaking facilities in the country's southwest.
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