China's antitrust bureau conditionally approves SK Hynix's purchase of Intel's NAND memory chip business
Published: Dec 22, 2021 09:31 PM
SK Hynix. Photo: CFP

SK Hynix. Photo: CFP

China's top market regulator announced on Wednesday its antitrust review decision that conditionally approves SK Hynix's planned purchase of Intel's NAND memory chip business. 

The restrictive conditions will be effective for 5 years, after which the antitrust bureau will decide whether to remove the conditions according to SK Hynix's application and competition in the market, according to a notice published by the State Administration for Market Regulation (SAMR) on Wednesday.

One of the conditions is that the prices of SK Hynix products sold in the Chinese market shall not be higher than their average prices in the 24 months prior to the merger, provided that the transaction terms are comparable.

The case is currently under further review with a deadline of January 15, 2022, the SAMR announced.

SK Hynix told the Global Times on Wednesday that it sincerely welcomes and thanks the approval from the Chinese antitrust authorities which suggests the South Korean chip firm has gained approval from antitrust agencies in eight different jurisdictions. 

Upon the deal completion, SK Hynix will take over Intel's NAND solid-state drive (SSD) memory chip business and its assets in Dalian, Northeast China's Liaoning Province, including SSD-related IP and staff. The allocation for the first phase is $7 billion.

"Setting relevant additional conditions can better maintain market fairness, innovation and order. The antitrust process was compliant and transparent," Wang Peng, assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times on Wednesday.

The SAMR said it received the antitrust declaration of the concentration of operators in the case of SK Hynix's purchase of Intel business on December 15, 2020. The regulator considered that this concentration has or may have the effect of excluding or limiting competition in the global and domestic PCIe SSD market and SATA SSD market.

After the completion of the deal, the main competitors in the enterprise-class SATA SSD market will decrease from 4 to 3 in the world and SK Hynix's total global market share o will exceed 90 percent, up from between 30 and 35 percent in 2020. Major competitors in the enterprise-level PCIe SSD market will decrease from 3 to 2, with a combined global market share of more than 80 percent, up from about 40 and 45 percent in 2020, said SAMR.

The Chinese antitrust bureau said that the purchase will integrate the patents and unique know-how of both parties, eliminate SK Hynix's close competitors in the global and Chinese market, reduce competition constraints faced by SK Hynix and further improve its market control.

The decision was announced amid ongoing outrage against Intel across Chinese social media for distorting facts about Northwest China's Xinjiang Uygur Autonomous Region on a recent statement. The company required all its suppliers to avoid sourcing goods or services or use labor from Xinjiang due to fabricated accusations of "forced labor."