Intel has agreed to sell its NAND memory and storage business unit to South Korean chipmaker SK Hynix in an all-cash deal valued at $9 billion. The chipmaker plans to use the sale proceeds to invest in other fast-growing areas, including 5G networking, artificial intelligence, and the autonomous edge. Shares rose 1% in Monday’s after-market session.
Intel (INTC) said that the deal includes its “NAND SSD business, the NAND component and wafer business, and the Dalian NAND memory manufacturing facility in China.” The Optane business will not be part of the transaction, the company announced.
The transaction will close in phased manner with the final deal completion expected in March 2025. According to the terms of the deal, SK Hynix will get Intel’s NAND SSD business and the Dalian facility with the first payment of $7 billion. The remaining assets including “IP related to the manufacture and design of NAND flash wafers, R&D employees, and the Dalian fab workforce” will be transferred after receiving the payment of $2 billion, which is anticipated to happen in March 2025. (See INTC stock analysis on TipRanks).
Following Intel’s announcement, Mizuho Securities analyst Vijay Rakesh said “We believe a move away from NAND is structurally positive for INTC as it was an operational and financial drag.” Rakesh reiterated his Buy rating and the price target of $63 (15.4% upside potential).
Currently, the Street is also sidelined on the stock. The Hold analyst consensus is based on 14 Holds, 8 Buys and 9 Sells. Given the year-to-date share price decline of 8.8%, the average price target of $55.65 implies moderate upside potential of about 2% to current levels.
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