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By Kim Bo-eun
SK hynix said Tuesday it expects to get the green light from Chinese authorities within the latter half of this year for its $9 billion acquisition of Intel's NAND flash business.
China's approval is the final step the chipmaker needs for the completion of the acquisition deal.
"Including China, antitrust review is progressing in eight countries and we have received unconditional approval from seven countries including the U.S. and the EU. The process in China is in the final review stage. We are expecting to be able to receive approval at an appropriate time in the second half of the year so that we will be able to close the deal by the end of this year as we are planning," SK hynix Executive Vice President Noh Jong-won said in a conference call on the company's second-quarter earnings.
The chipmaker forecasted the annual growth rate of markets for memory chips including DRAMs and flash memory chips to exceed expectations this year as memory chip markets have been recovering the first half of this year at a faster-than-expected rate.
"Bit growth of DRAM demand in the market this year is expected to be in the low 20 percent range, from the earlier expectation of 20 percent," Noh said. "NAND flash, which was expected to show improvements in the latter half of the year, saw high rates of demand growth in the second quarter. We expect bit growth for NAND demand in the market to come to the mid-to-high 30 percent range this year, backed by greater demand for NAND in servers and mobile phones in the latter half of the year."
SK hynix said it is expecting a turnaround in its NAND business in the third quarter and a surplus for the year. The company's NAND business has been its long-term problem as it has recorded deficits for 11 consecutive quarters since the fourth quarter of 2018.
The SK affiliate attributed the improved performance of its NAND business to the reduction of costs as the portion of 128-layer NAND flash products grew to over 50 percent in the second quarter of this year. SK hynix said the next-generation 176-layer NAND flash will enter mass production at the end of this year as planned.
"By the end of this year, we expect the 128-layer and 176-layer NAND to account for up to 80 percent," Noh said.
The executive added the company is set to achieve a surplus for its NAND business next year as well, but noted that the cost of acquiring Intel's NAND business will be reflected.
SK hynix said its capital expenditure this year will take place as already planned. It forecasted the inventory level of memory chips would decrease throughout the remainder of this year and continue to fall through next year.
"The memory market in the first half of the year was centered on consumer products, but in the latter half will lead to enterprise demand," Noh said. "This trend will continue through next year, as the demand for high-capacity DRAM and NAND flash recovers swiftly as 5G smartphone supply expands and Intel launches a new CPU in the second half of the year."
SK hynix's sales for the second quarter came to 10.32 trillion won, up 20 percent year-on-year and 22 percent quarter-on-quarter. The chipmaker's sales exceeded 10 trillion won in the three years since the third quarter of 2018.
The company's operating profit for the second quarter came to 2.69 trillion won, which is up 38 percent year-on-year and up 103 percent quarter-on-quarter.
