Intel's NAND factory in China formally rebranded as SK hynix, following fresh American sanctions that restrict factory enhancements in China

In a significant move, SK hynix has completed the $9 billion acquisition of Intel's NAND and SSD business, first announced in 2020. The deal, which marks SK hynix's entry into the Chinese market, has, however, been met with challenges due to recent developments.

The U.S. Commerce Department has revoked the 'Validated End-User' (VEU) licenses that previously allowed Samsung and SK hynix to import American semiconductor gear into China without case-by-case approval. This revocation is expected to take effect on December 31 and will significantly impact the future viability of SK hynix's Dalian plant, formerly known as Intel Semiconductor Storage Technology (Dalian) Co., Ltd.

The Dalian plant, which was Intel's first plant in China and was officially launched in 2010, is currently producing 192-layer NAND, a technology inherited from Intel. Many Quadruple Level Cell (QLC)-based consumer SSDs still rely on this technology, but the plant's future prospects are limited due to the lack of access to newer U.S. tools.

The revocation does not prevent existing tools from being serviced or supported, but it ends the possibility of expansion or upgrades to advanced equipment. As a result, SK hynix is unlikely to transition to its cutting-edge 238- or 321-layer NAND technology at the Dalian plant without access to U.S. tools.

Intel Asia Holding exited as a shareholder in March, officially marking Intel's exit from the NAND business in China. SK hynix executive Young-Sik Kim is now listed as a legal representative of the renamed company, which reflects the full ownership by SK hynix. The rebrand finalizes the transfer of all facilities and people from Intel to SK hynix.

It's worth noting that the revocation does not affect the ownership of the name, assets, and market share by SK hynix. The operation of Solidigm, which now operates under SK hynix, is also not directly impacted by the revocation.

The current status of expansion or modernization possibilities for the Fab-68 plant in Dalian remains unclear. SK hynix now faces difficulties in scaling in China due to Washington's efforts to restrict semiconductor tools. The company will need to navigate these challenges to ensure the long-term viability of its operations in China.