South Korean memory chip maker SK Hynix will acquire Intel's NAND memory and storage business for $9 billion, the pair announced on Tuesday.
The deal includes the US chip giant's NAND SSD business, NAND component and wafer business, and its NAND memory chip facility in Dalian, China.
Intel's Optane memory business was not part of the deal, however, and will remain with the US company.
The pair are now seeking to obtain government approvals, which are expected to finalised by late 2021.
If the approvals are accepted, SK Hynix would make an initial payment of $7 billion to acquire Intel's NAND SSD business, which includes IP, employees, and the Dalian facility.
Following the initial payment, SK Hynix would then acquire the US chip giant's remaining assets -- IP related to the manufacturing and design of NAND flash wafers, research employees, and the Dalian factory workers -- through a final payment of $2 billion, which is provided in March 2025.
In the meantime, Intel will continue to produce wafers at its Dalian facility and retain its IP until the final closing.
In a statement, SK Hynix said acquiring Intel's NAND SSD technology and quadruple level cell NAND flash products would enhance the competitiveness of its storage solutions, especially its enterprise SSDs.
Intel's NAND businesses contributed $600 million in operating income and $2.8 billion in sales to its non-volatile memory solutions group during the first six months of 2020, the pair said.
Meanwhile, Intel said it plans to invest the deal's proceeds into various artificial intelligence, 5G, and intelligent, autonomous edge capabilities.
If the deal is approved, SK Hynix would become the world's second-largest NAND Flash maker after Samsung, the undisputed leader in the sector. Since the COVID-19 pandemic, SK Hynix and Samsung have both seen a surge in demand for NAND flash memory from PCs and servers.
According to market research firm TrendForce, Samsung held a 31.4% share of the NAND flash market in the second quarter, followed by Kioxia's 17.2%, and Western Digital's 15.5%. SK Hynix was ranked fourth with a share of 11.7% and Intel placed sixth with 11.5%.
The Chinese tech giant will no longer be able to procure memory chips from its main South Korean suppliers.
Demand for memory products for server and graphic applications spurred growth.
Intel is aiming to create an ecosystem for industrial IoT, which will be enabled by 5G.
Boasting 20% faster system performance and 19% faster web application performance compared to the 10th Gen.
The expanded factory line at the Pyeongtaek plant will begin producing 100-layer class V-NAND flash memory in 2021.