The potential SK Hynix-Intel partnership has generated significant market interest, with Intel shares surging 5.2% in pre-market trading and SK Hynix's stock finishing 4.1% higher in Seoul following the latest developments. According to Reuters, the talks represent a major shift in the global semiconductor landscape, with both companies exploring different structural approaches to manufacturing memory chips in the US for the first time. Under one potential scenario, SK Hynix would lease part of Intel's long-planned chipmaking facility in Ohio, while another scenario involves forming a venture with Intel and major cloud companies keen to secure memory chip supplies. The deal would relieve pressure on Intel, which has been struggling, and mark a significant win for the Trump administration, which has been ramping up pressure on chipmakers to build in the United States as relentless investment in AI and data centres fuels an acute shortage of memory chips.
A deal would relieve pressure on Intel, which has been struggling, and mark a significant win for the Trump administration, which has been ramping up pressure on chipmakers to build in the United States as relentless investment in AI and data centres fuels an acute shortage of memory chips. However, potential opposition from Seoul could pose a major hurdle, with one source describing the talks as exploratory and stressing that no decisions have been made. The South Korean government is seeking to use any US investment by SK Hynix as leverage in ongoing negotiations, while Washington continues to heap pressure on the firm to quickly commit to US expansion. U.S. Commerce Secretary Howard Lutnick has threatened to impose up to 100% tariffs on South Korean and Taiwanese companies unless they commit to increased production on American soil, adding complexity to the negotiations. Establishing production in Ohio could help address both concerns, potentially building a more complete US supply chain spanning wafer production and packaging.
Any agreement to produce advanced memory such as HBM or DRAM could face pushback from the South Korean government, which considers those technologies sensitive. The company's product lineup includes DRAM chips used in servers, PCs and smartphones and NAND flash memory for long-term storage, along with high-bandwidth memory (HBM) used in AI processors — the last of which SK Hynix leads globally. Details about specific chip types SK Hynix may manufacture in Ohio remain undisclosed, but any production of advanced memory technologies could trigger opposition from Seoul, according to Reuters. Asked about a potential SK Hynix plan to produce chips in the U.S., South Korea's trade ministry said any decision would be at the company's discretion but if it involved "national core technology," it would be subject to review under the Industrial Technology Protection Act.
SK Hynix said in a statement to Reuters that it is "reviewing various measures, including establishing additional production bases, to strengthen the competitiveness of its memory business," though "no matters have been determined at this stage." Intel declined to comment on what it called speculation, but added that it was continuing with investments in Ohio to ready the site. The company faces enormous pressure and lobbying from customers and countries to supply more chips, with SK Group chairman Chey Tae-won saying in July that he believes SK Hynix should build a US factory if feasible. The two companies also have an established relationship, as SK Hynix agreed to acquire Intel's NAND business in 2020, began taking over operations in stages in 2021, and completed the acquisition last year. SK Hynix has no chip production facility in the United States, while the company is building an advanced packaging plant in Indiana, but has no front-end wafer fabrication capacity in the country.
Manufacturing semiconductors in the US costs significantly more than in South Korea due to higher labour and construction costs, with much of the semiconductor industry's supply chain located within Asia, which also increases US costs. Despite these higher expenses, SK Hynix, which recently completed a secondary listing on the Nasdaq in July and currently only has a chip packaging facility under construction in Indiana, has good reasons to pursue US manufacturing. Intel announced in 2022 that it would invest up to $100 billion to build potentially the world's largest chipmaking complex in Ohio, with production scheduled to begin in 2025, though completion has since been delayed to 2030 and 2031. The deal would also ease some of the financial strain on Intel, which is part-owned by the U.S. government, as the company faces enormous pressure to supply more chips to customers and countries globally. Producing chips closer to customers could also reduce supply chain risks while helping the company respond to U.S. requirements for local production.
