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Intel exits memory business, sale to Hynix for $9B
- mschuster91 6y agoYet another instance of an industry giant selling off core parts of the business. Are Intel in so desperate need of cash?!
- raverbashing 6y agoNo kidding Maybe they need money to sink in their 7nm/5nm new projects, but it seems they're losing their hand there Intel seems to have a great timing for doing the wrong thing at the right time. E.g. their sale of their Arm division
- mehrdada 6y agoHow is the hyper-competitive, low-margin, commodity NAND business core to what Intel does or aspires to do? (Intel is of course not doing their best at their core, but this does not seem to be an instance of it IMO. This is more analogous to exiting the DRAM business early in their existence)
- mschuster91 6y ago> How is the hyper-competitive, low-margin, commodity NAND business core to what Intel does or aspires to do? Because that "commodity" gives a company a steady revenue stream. The less diversification a business has, the more vulnerable it is in case of issues (e.g. the fiasco that is the new fab process sizes), market demand shifts or other external events (wars, tariff / trade wars, pandemics, economic crises). Intel is now trading that revenue stream for a one time cash injection, probably to get back on their feet regarding the mentioned new fab processes - but if that bet fails, they're out of all the money they spent AND don't have that revenue stream anymore. In my opinion this is a dangerous short-sighted move driven by bean counters with next-quarterly-only incentives...
- rocqua 6y agoGoing all in on your core business is risky, but I wouldn't call it short sighted. It seems more like being committed to you technical decisions, and deciding "If we can't make it here, whats the sense in even staying around".
- willcipriano 6y agoPoking around it looks like Intel announced a plan for $10 billon worth of stock buybacks recently. If that's true this isn't "going all in on your core business" and instead more like going all in on your share price.
- mythz 6y agoA bit of both, from their announcement [1]: "For Intel, this transaction allow us to further prioritize our investments in differentiated technology ... and deliver attractive returns to our stockholders." [1] https://newsroom.intel.com/news-releases/nand-memory-news/ https://newsroom.intel.com/news-releases/nand-memory-news/
- danaris 6y agoThis feels like moving the goalposts: first it was a core part of their business, now it's diversification. The core of Intel's business is x86.
- deleted 6y ago[deleted]
- baybal2 6y agoIt's also about financial engineering, financial engineers proselytise people into believing the idea that all business of a company need to be in a single profitability band, or the financial magical doom will come.
- pulse7 6y agoIntel's NAND SSD is not "core part of the business". Core parts are CPUs...
- williadc 6y agoWow, that's more than half a Mobileye or Altera!
- lend000 6y agoIntel's NAND flash was overshadowed by their Optane (not included in the sale) and lagging behind Hynix and Samsung, so I guess this isn't such a bad move. The cynical take is that the CFO running Intel is attempting a bunch of standard corporate restructuring strategies to delay the effects of their slowing technical innovation. It is definitely concerning from a US technical superiority standpoint to consider that this same CFO may soon try to sell off some of their more competitive fabs.
- bnt 6y agoThe real shitshow starts when the CFO becomes the CEO (as is usually the case), so Intel is pretty much dead as is US tech innovation on this scale (until VCs do what China does and start pouring money into hard stuff, not just fluffy software).
- duhast 6y agoFluffy software drives demand for fancy hardware. Intel valuation wouldn’t be where it is without growing software market.
- baybal2 6y ago> Fluffy software drives demand for fancy hardware. Fluffy hardware drives demand for fancy semiconductors. Intel valuation wouldn’t be where it is without... eh, what? And this is where the skeleton in the closet is. For a major silicon vendor, it becomes more, and more scary to not simply get on the wrong side with chip manufacturer, but even just missing on the next best deal possible. Companies that actually make all those chips don't matter as much when you are a 3rd-4th-5th tier company in your niche, and they don't care much about you. But the moment you become a bigger fish, your stakes become much, much higher. If a popular part (like a cellphone SOC) vendor gets a 10% worse fab deal than its competitor, that part vendor is likely on the way out. In fact, it's a long going "conspiracy theory" in the industry that chip makers keep playing their biggest clients against each other to prevent any of them getting too much negotiating power.
- 6y ago
- miahi 6y agoA small fix to the HN title: it's about NAND (flash) memory, so basically "storage/SSD", not RAM "memory".
- tsjq 6y agoThanks. I was about to ask the same question
- bartread 6y agoIndeed. I was briefly foxed as well, given Andy Grove talks about Intel bailing on the memory business back in the 80s right at the start of High Output Management.
- aquadrop 6y agoAnd also doesn't include XPoint "storage/SSD", so yep, literally only NAND.
- supernova87a 6y agoI guess it harkens back to their first few years, when they decided to sell off their DRAM business? Although, not so clear now whether it means they're on another course to greatness...
- TMWNN 6y agoYes, I was thinking of the same precedent. IBM got out of memory at about the same time, I believe, and for the same reason: Too low margins to make continuing to fight against the tough competition worthwhile. >Although, not so clear now whether it means they're on another course to greatness... This is the $64,000 question. Intel got out of the memory business when it was clear by 1985 that CPUs were its future. I didn't write x86 because Intel itself wasn't convinced of this; see iAPX 432, i860, Itanium, and StrongARM/Xscale. All failed to give Intel the backup/alternative to x86 that it has repeatedly sought. It is not an exaggeration to say that Intel has failed, or at least failed to distinguish itself, in every single market it has entered since IBM chose the 8088 forty years ago. Besides the above alternative instructional sets/architectures and flash memory, antivirus (still perhaps the most mystifying move in Intel history), servers/motherboards, and GPUs come to mind. The most successful non-x86 business for Intel is ... Ethernet cards? Meanwhile, it's embarrassed itself with discrete GPUs at least three separate times. A few years ago buying Nvidia would have been a savvy move; now it can no longer do so, and it's not impossible to imagine Nvidia buying Intel in the future. Even within the one market Intel does dominate, what saved the company 15 years ago amidst Itanic and Pentium 4 was 1) AMD Thunderbird being just as inefficient as Pentium 4 and, more importantly, 2) an Intel Israel skunk works project to improve on the Pentium 3. There is no such out-of-the-blue miracle this time.
- setpatchaddress 6y agoNvidia is interesting. If Intel had bought it, would they have wasted the opportunity? Of all of the others, StrongARM/Xscale seems obviously the biggest missed opportunity. Threw it away one year before the iPhone.
- ralph84 6y agoThe sale price is less than 2X revenue. All of the margin in flash memory has been sucked up by cloud providers and Apple.
- baybal2 6y agoNo, it wasn't. Lazy salesmanship did. Go and look how much margin a distributor still have wholesale for mainstream NAND flash.
- freeone3000 6y agoBut why buy Intel when Samsung has a device in every class (even enterprise) that's just as fast or faster, and cheaper as well? This is the fifth-best SSD manufacturer selling out to the third-best SSD manufacturer. No matter how much you put into marketing, it's a worse product being sold to technical purchasers.
- baybal2 6y agoIndeed it is, but flash is a commodity, and if somebody IS still buying Intel NAND if the price is ok for them, and Intel will still have somewhat good money from that, then why not? Intel can even stop investing further into flash R&D, and it will be years, and years before they will be outpriced, even with discount for their lower performance.
- bhouston 6y agoI bet 2nd, 3rd and 4th tier nand manufacturers are popular in data centers.
- tw04 6y agoBecause basically every enterprise storage provider on the planet has contracts that require a minimum of dual-sourcing. Beyond that I'm not sure where you've seen Samsung be cheaper - they're more expensive across the board. Obviously storage vendors aren't paying retail: https://www.newegg.com/intel-d3-s4510-1-92tb/p/0D9-002V-003V9 https://www.newegg.com/intel-d3-s4510-1-92tb/p/0D9-002V-003V... https://www.amazon.com/Samsung-PM863a-Enterprise-Internal-MZ-7LM1T9N/dp/B01MA34RLJ https://www.amazon.com/Samsung-PM863a-Enterprise-Internal-MZ...
- blackcat201 6y agoDoes Intel only sold the NAND manufacturing parts to SK Hynix or it also includes the SSD controllers IP? Because most of Intel SSD performance came from the controller not the NAND flash themselves, in fact Intel usually lag behind in NAND flash manufacturing.
- wtallis 6y agoIt will probably include the controller IP. However, none of Intel's IP will be transferred until 2025. That should give them time to disentangle any of the IP that's shared between the NAND SSD controllers and the Optane SSD controllers, and give Hynix time to decide whether it's worth continuing development of both their existing enterprise SSD controllers and Intel's designs.
- wittypineapple 6y agoanother feather in the cap of Intel. Looks like AMD has them by the balls.
- ekianjo 6y agoAMD is hardly making a dent in Intels massive entreprise market
- ChuckNorris89 6y agoiPhone was also barely making a dent in Nokia and Blackerry's margins in the first couple of years. The difference is the update cycles are longer in this business but intel could be the next Nokia in 10-20 years.
- oblio 6y agoBy then all the current board members will be retired :-)
- tharne 6y agoAnd right there you just pinpointed the reason why so few companies truly innovate anymore. There's no benefit to innovation if the only thing you're ever evaluated on is how profitable you were in the prior three months.
- mrguyorama 6y agoWorse, if you're a 60yr old board member, you're not going to approve of a project that wont get returns to you quickly. How can any company make a 10 year investment when none of the board cares longer term than their retirement in a couple years
- Tepix 6y agoWe bought our first EPYC server last year. We'll buy many more.
- pseingatl 6y agoMore US manufacturing relocated overseas. When China bans exports to the US, maybe then we can bring it back.
- dathinab 6y agoYou mean when the CCP invades Taiwan. Because as far as I know non of the state of the at chip manufacturing is fine in CCP controlled territory. There are a bunch of chip fabs in China but that all lack behind as much or likely more then Intel.
- simonh 6y agoThe Intel NAND manufacturing facility that was sold was already in Dalian, China.
- andromeduck 6y agoI wonder what side the Vancouver office landed on... Presumably 3dxp but you never know.
- deleted 6y ago[deleted]
- princekolt 6y agoI see Intel is refocusing their business down on only producing CVEs now.
- DavidNielsen 6y agoYou magnificent beast, I nearly spewed my tea halfway across the room. That is just chef’s kiss perfection.
- bumblebritches5 6y agoWhat the hell is Intel trying to do?
- mythz 6y agoThe "intel view" of this announcement can be found on their newsroom [1], its justification for this sale is basically this PR spin its CEO: "For Intel, this transaction will allow us to further prioritize our investments in differentiated technology where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders." [1] https://newsroom.intel.com/news-releases/nand-memory-news/ https://newsroom.intel.com/news-releases/nand-memory-news/
- baxtr 6y agoTranslates into: “we didn’t know how to play this right and now we need to cut or loses quickly, otherwise we’re doomed”
- mythz 6y agoEveryone seems critical of this sale as some sort of imploding canary for their impending financial doom but if they don't see a lucrative or competitive future for this business than I don't think divesting from it is a bad idea, using the proceeds for buy backs effectively makes their business smaller whilst retaining the same inherent value. It goes against Wall St's grow-at-all-costs philosophy, but personally I think sitting on a war chest waiting for the next big opportunity is better than pouring investments in a low margin business playing catchup from 5th place. Personally I believe Intel needs some big wins as they're basically getting their lunch eaten from all sides. Fortunately they're still highly profitable which affords them a lot of opportunity for investments, if they can't do that their future may be dependent on others successes of their intelcapital.com arm, which worked well for Yahoo! who at the end, most of their value came from their Alibaba investment. [1] https://newsroom.intel.com/news-releases/nand-memory-news/ https://newsroom.intel.com/news-releases/nand-memory-news/
- icegreentea2 6y agoA tinge of sadness. I remember reading reviews of the X-25 like a decade ago and being so excited (it was this anandtech review https://www.anandtech.com/show/2614 https://www.anandtech.com/show/2614). To me it was the dawn of the "common SSD". Just now I've looked at a bunch of timelines of SSD history, and I suspect the X-25 was similar to many other people. There was certainly a lot of SSD activity prior to the X-25 being released, but it seemed like the only customer facing brand that had an offering before it was OCZ (you can see it in the review comparisons... you can also marvel at the old 10k RPM HDDs... how's that for a nostalgia trip).
- wtallis 6y agoIntel pretty much stopped being relevant to the consumer SSD market as soon as the SSD market as a whole broadened enough to support the development of client/consumer-specific SSD controllers. Once Intel could no longer compete by stripping a few features out of an enterprise SSD design, their consumer SSD products had no real advantage over other brands. (Minor exception: Intel's consumer QLC NVMe drives have consistently had very good retail prices.)
- junar 6y agoIf you mean the 660p/665p, I think even those SSDs are not worth it. The Kingston A2000 uses the same SM2263 controller, is about the same price, but uses TLC NAND instead of QLC.
- icegreentea2 6y agoOh totally. By the time I actually had my own money to buy an SSD (so like 2013 or so), Intel was completely out of the running (I went for a Crucial). As you said, I remember looking at some reviews last year and being surprised that Intel was in the running at all in any category.
- fomine3 6y agoIntel 600p was a disaster. I'm curious why they designed such product for first NVMe drive.
- dboreham 6y agoAgain.
- scott-smith_us 6y agoMaybe I'm old fashioned, but I'm just glad that Hynix is still intact.
- jeffbee 6y agoWhy wouldn't they be? They are in practice a state industry of South Korea. Or are you saying you're glad they weathered the 2001 crisis?
- benbenolson 6y agoReally deceptive title. They didn't exit the memory business; it was just their NAND business specifically. The title on skhynix.com is more correct.
- wtallis 6y agoIntel's divesting their NAND memory business, they haven't had a DRAM business in a very long time, and they have not yet started up their own production of 3D XPoint memory, or even announced concrete plans to do so. The title is accurate even though it does not include all the relevant context.
- rossdavidh 6y agoNote: once upon a time, Intel's fab strategy involved new fabs making CPU's (x86) for a couple years, then being repurposed for memory. This meant that their memory fabs were practically free (i.e. they were building them for CPU business anyway), which helped them compete on price in memory. I'm sure they still find some use for their no-longer-brand-new fabs, but this kind of examination of each business line in isolation doesn't take into account synergies like that. I can easily imagine Intel doing one "makes good business sense" decision after another, until they are no longer able to manufacture competitively at all. Oh, wait, maybe that already happened a couple years ago...
- cm2187 6y agoWhat reputation does Hynix have for server SSDs? Everything I read about Intel SSDs were that they were rock solid in term of reliability, but mostly resiliency to crash/power loss.
- jkuria 6y agoHmmh, I thought Andy Grove's strategic genius was to get Intel out of memory entirely and double down on processors. At least this is one of the reasons the popular business press celebrates him. Didn't know they were still in this business.
- hungryhobo 6y agoJust interesting that on an article about Intel (a US company) and Hynix (a Korean company), half the comments are about china.
- fomine3 6y agoIntel has NAND fabs in China.