SK Hynix in talks with Intel to make memory chips in US for first time
SK Hynix is in talks with Intel about a deal that would see it manufacture memory chips in the US for the first time, with scenarios including leasing part of Intel's Ohio facility or forming a venture with cloud firms. Potential opposition from Seoul over sensitive technology could be a major hurdl
SEOUL: South Korea's SK Hynix is in talks with Intel about a deal that would see it manufacture memory chips on US soil for the first time, three people familiar with the discussions said. Under one potential scenario, SK Hynix would lease part of Intel's long-planned chipmaking facility in Ohio; under another, it could form a venture with Intel and major cloud firms keen to lock in memory chip supplies, two of the people said.
A deal would relieve pressure on struggling Intel and mark a big win for the Trump administration, which has been ramping up pressure on chipmakers to build in the United States as relentless investment in AI and data centres fuels an acute shortage of memory chips. But potential opposition from Seoul could be a major hurdle, the sources said. One source described the talks as exploratory and stressed that no decisions have been made, adding that SK Hynix might consider other ways to structure the deal.
Details about how a deal might be structured are being reported for the first time. Reuters was not able to learn what types of chips SK Hynix may manufacture in Ohio if an agreement is struck. Its product lineup includes DRAM chips used in servers, PCs and smartphones, NAND flash memory chips for long-term storage, and it is the leading supplier of high-bandwidth memory (HBM) used in AI processing units.
Any agreement to produce advanced memory such as HBM or even DRAM could run into opposition from the South Korean government, as those technologies are considered sensitive, said the three sources, who declined to be identified as the information is not public. SK Hynix said it is "reviewing various measures, including establishing additional production bases, to strengthen the competitiveness of its memory business", but "no matters have been determined at this stage". Intel declined to comment on what it called speculation, but added that it was continuing with investments in Ohio to ready the site.
Asked about a potential SK Hynix plan to produce chips in the US, South Korea's trade ministry said any decision would be at the company's discretion, but if it involved a "national core technology", it would be subject to a review under the Industrial Technology Protection Act. The US Commerce Department did not respond to a request for comment.
Manufacturing semiconductors in the US costs much more than in South Korea, according to two of the sources, citing significantly higher labour and construction costs, with much of the supply chain located within Asia, which also increases US costs. Even so, SK Hynix, which completed a secondary listing on the Nasdaq in July and currently only has a chip packaging facility under construction in Indiana, has good reasons to pursue fabricating chips in the United States. Chey Tae-won, chairman of the SK Group conglomerate that SK Hynix is part of, said in July: "I think we need to build a factory in the United States. If possible, I believe we should build it."
A deal with SK Hynix would also ease some of the financial strain on Intel, which is part-owned by the US government. Intel announced in 2022 that it would invest up to US$100 billion to build potentially the world's largest chipmaking complex in Ohio, with production scheduled to begin in 2025, but completion of the site's two plants has since been delayed to 2030 and 2031.
Pleasing both Washington and Seoul could be tough, however, particularly as SK Hynix and rival Samsung Electronics have been urged by Seoul to accelerate plans to build a new cluster of chipmaking facilities in South Korea's southwest. US Commerce Secretary Howard Lutnick has threatened to impose up to 100 per cent tariffs on South Korean and Taiwanese companies unless they commit to increased production on American soil. Both countries have also been wrangling over the execution of a huge investment commitment South Korea made to the US last year in return for lower US tariffs, with some US$150 billion of a proposed US$350 billion earmarked for shipbuilding and the remaining US$200 billion undecided. Two of the sources said this has left SK Hynix in a difficult position, with Seoul seeking to use any US investment by SK Hynix as leverage in the talks, and Washington heaping pressure on the firm to quickly commit to a US expansion.
