SK Hynix might start making memory chips in US
What's the story
South Korean tech giant SK Hynix is in talks with Intel to manufacture memory chips in the US, as per Reuters. This would be a first for the company, if successful. The discussions are still exploratory, and no final decisions have been made yet, according to three people familiar with the matter.
Possibilities
Collaboration could take 2 forms
The potential collaboration could take two forms.
One option is that SK Hynix could lease part of Intel's planned chipmaking facility in Ohio.
The other possibility is a joint venture with Intel and major cloud companies looking to secure memory chip supplies.
However, any deal could face opposition from the South Korean government and, if it involved a national core technology, would be subject to a review under the Industrial Technology Protection Act.
Market impact
Deal could be major win for Trump administration
The deal could ease Intel's woes and be a major win for the Trump administration.
It has been pushing chipmakers to manufacture in the US amid a severe shortage of memory chips due to heavy investment in AI and data centers.
However, potential opposition from Seoul could be a major hurdle.
The talks are still exploratory, with no decisions made yet, according to one of the sources.
Production potential
SK Hynix's product lineup includes DRAM chips
SK Hynix's product lineup includes DRAM chips used in servers, PCs, smartphones, and NAND flash memory chips for long-term storage.
The company also supplies high-bandwidth memory (HBM) for AI processing units.
Despite the higher costs associated with manufacturing semiconductors in the US compared to South Korea, SK Hynix has strong reasons to consider this move.
Factory plans
A deal with SK Hynix could ease Intel's woes
SK Hynix's Group Chairman Chey Tae-won had said in July that the company is under pressure from customers and countries to supply more chips. He had hinted at the need for a factory in the US.
A deal with SK Hynix could also ease some of Intel's financial strain.
In 2022, Intel had announced plans to invest up to $100 billion in a massive chipmaking complex in Ohio, with production starting by 2025.
Negotiation
Negotiating deal that satisfies Washington, Seoul could be difficult
Negotiating a deal that satisfies both Washington and Seoul could be difficult.
This is especially true as SK Hynix and Samsung Electronics have been urged by Seoul to expedite plans for a new cluster of chipmaking facilities in South Korea's southwest.
Meanwhile, US Commerce Secretary Howard Lutnick has threatened tariffs up to 100% on South Korean and Taiwanese companies unless they agree to increase production in America.