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Why is SK Hynix considering Intel's Ohio factory for US AI memory production?
SK Hynix is considering Intel’s Ohio factory for US memory chip production as AI demand grows, with HBM supply and semiconductor expansion in focus.
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SK Hynix is in talks with Intel to make memory chips in the US for the first time. The talks are focused on finding ways for SK Hynix to use Intel’s US manufacturing facilities for memory chip production.
One option is for SK Hynix to lease part of Intel’s Ohio chipmaking facility. Under this plan, SK Hynix could use space inside Intel’s Ohio factory to manufacture its chips instead of building an entirely new facility, as reported by Reuters, citing people familiar with the matter.
SK Hynix Intel Ohio deal
Another option could involve a joint venture. Reuters reported that Intel and SK Hynix could potentially create a joint venture, with major cloud companies also involved in the arrangemen.
The companies are also looking at other ways to structure the deal. The Ohio factory lease and joint-venture idea are not the only possibilities being considered. SK Hynix could explore other arrangements with Intel as talks continue.
Intel foundry business
A deal would give Intel a major customer for its chipmaking business. Intel has been trying to attract large outside customers to its manufacturing, or foundry, business. Winning SK Hynix as a customer would support this part of CEO Lip-Bu Tan’s strategy.
Intel’s foundry business is a major part of its turnaround plan.The deal could also support the US push to make more semiconductors domestically. Having SK Hynix manufacture memory chips in the US would add another major semiconductor producer to America’s manufacturing base.
HBM memory for AI
SK Hynix is especially important to the AI chip supply chain because of HBM. The South Korean company is one of the world’s leading suppliers of high-bandwidth memory, or HBM. HBM is a key part of Nvidia’s AI chips. These memory chips help AI processors handle the huge amounts of data needed for AI computing.
South Korea HBM concerns
The possible deal could face a major hurdle from South Korea. Advanced memory technologies, including HBM-related technology, are considered sensitive in South Korea. Reuters reported, citing three sources, that the South Korean government could oppose a deal involving production of advanced memory such as HBM in the US.
AI boom boosts memory demand
SK Hynix has benefited heavily from the AI boom. The rapid expansion of AI has led companies to build more data centers, creating strong demand for advanced memory chips. The AI data-center boom has also created a memory chip shortage.
The company is already planning a major increase in production. SK Hynix announced in June that it plans to double its capacity over the next five years as it prepares for continued demand from AI and data centers.
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SK Hynix US expansion
Chairman Chey Tae-won told CNBC in July that demand for HBM is “enormous.” SK Hynix broke ground last month on its first US facility, which is being built in Indiana. SK Hynix CEO Kwak Noh-Jung said the factory is expected to make Indiana a key HBM production base in America by 2030.
Why Ohio factory matters
That makes the Intel-Ohio talks different from SK Hynix’s existing US expansion. The Indiana project is SK Hynix’s own new facility, while the Ohio proposal would potentially allow the company to use an existing Intel manufacturing site.
The main reason behind the Ohio talks is the growing need for AI memory in the US. SK Hynix needs to expand HBM production as AI companies and cloud providers build more data centers, while Intel is looking for major customers for its US chipmaking operations.
For SK Hynix, using Intel’s Ohio facility could offer another way to expand US production. Instead of relying only on its new Indiana plant, the company could potentially use Intel’s existing manufacturing infrastructure if the two sides reach an agreement. But the Ohio plan is not final. The companies are still discussing possible structures, and any agreement would need to address business, manufacturing and technology concerns — including the sensitivity around advanced South Korean semiconductor technology.
