SK hynix Negotiating to Buy Intel Chip Complex in Ohio for Memory Production

SK hynix is reportedly in talks with Intel to buy a semiconductor complex in Ohio, United States. The South Korean chipmaker is targeting the start of early-stage memory chip production at the site within five years.

Korea JoongAng Daily reported Tuesday, July 22, based on exclusive information obtained by JoongAng Ilbo, reported that SK hynix is conducting an internal study and undergoing a government approval process. The purchase price and transaction schedule are still being discussed.

The complex offers SK hynix a fast track to build memory production in the US. Most of the basic work has been completed so that the company does not have to build the entire facility from scratch.

For Intel, the sale of the region could add cash to overhaul its loss-making foundry business. Foundry is a chip-making service for other companies.

Intel began building the complex in New Albany, Ohio, in 2022. The project is the company's first new manufacturing facility in 40 years.

Concrete casting and steel frame installation have been carried out. The complex, which covers an area of approximately 4.05 million square meters or 405 hectares, is enough to accommodate eight semiconductor factories.

Intel estimates that the development of the entire area will require around 100 billion US dollars. In the first phase, the company originally planned to invest 28 billion US dollars to build Fab 27 and Fab 28.

The two new-generation chip factories were originally targeted to be completed by 2025. Intel also plans to recruit 3,000 engineers to produce cutting-edge semiconductors.

The project relies heavily on support from the federal government through the CHIPS and Science Act. The law provides subsidies to strengthen semiconductor production in the US.

However, Intel's foundry business has struggled to find customers. Production success rates and delays in advanced manufacturing technology have also weighed on the business.

Major technology companies such as Nvidia, Apple, and AMD have chosen to outsource their chip production to Taiwan's TSMC.

Financial pressures led Intel to announce massive layoffs and cut investments last year. The Ohio plant's operational schedule was also delayed until 2030 or 2031.

Intel's foundry division posted a loss of $2.2 billion last year. Losses continued at $2.4 billion in the first quarter of this year.

Intel recently hired former SK hynix CEO Lee Seok-hee as an executive vice president overseeing the foundry division. The recruitment is part of efforts to strengthen the final stage of production, including increasing the success rate of chips that meet standards.

According to the Korea JoongAng Daily, the purchase of the Ohio complex could also help SK hynix meet Washington's pressure for South Korean chip manufacturers to increase investment and production in the US.

The Donald Trump administration has urged Samsung Electronics and SK hynix to increase investment. Washington wants to strengthen domestic semiconductor production and reorganize its supply chain.

Samsung is now building a state-of-the-art foundry facility as well as a research and development center in Taylor, Texas. Its investment value is around 37 billion US dollars and the facility is targeted to start operating next year.

SK hynix is also building a high-bandwidth memory or HBM packaging facility in Indiana with an investment of around 3.87 billion US dollars. The facility is targeted to be operational in 2028.

However, Washington is still asking for additional investment. US Trade Minister Howard Lutnick on July 10 said he wanted Samsung Electronics and SK hynix to build production facilities in the US.

Industry observers assess that the demand is not only targeting foundries and packaging, but also the initial memory production, namely the process of making chips before packaging. One of them is DRAM, a type of memory chip that is widely used in computers and data centers.

"The United States is moving to build a fully independent AI semiconductor supply chain by placing design, foundry, memory, and packaging within its own territory," said Sejong University professor Kim Dae-jong, quoted by Korea JoongAng Daily.

SK Group Chairman Chey Tae-won on July 15 said memory chip prices were very high and supplies needed to be added to bring prices down. On the same day, he said SK was looking for a location in the US to build a semiconductor plant quickly.