Intel (NASDAQ:INTC) stock is up 4% in morning trading on Wednesday, following a report that the chipmaker was in talks with SK Hynix (NASDAQ:SKHY) that would allow the South Korean company to manufacture memory chips on U.S. soil. According to the report, SK Hynix is considering leasing part of Intel's $28 billion chip manufacturing facility in Ohio. Another option, according to the report, would involve SK Hynix forming an agreement with Intel and other major cloud companies seeking memory chip supplies.
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Continue » SK Hynix is a leading manufacturer of memory chips and is known for supplying advanced high-bandwidth memory (HBM) used in AI accelerators. Either deal could be a major victory for Intel, which has nearly 1,000 acres of land to accommodate up to eight chip factories, but has struggled to find customers for its fledgling foundry business. SK Hynix stock was up 2% in morning trading.
Before any such agreement is reached, SK Hynix would need to get approval from South Korea -- and that could pose difficulties, according to the report. The South Korean government could oppose the production of HBM and DRAM because the technologies are considered sensitive. SK Hynix released a statement to that it is "reviewing various measures, including establishing additional production bases, to strengthen the competitiveness of its memory business," and "no matters have been determined at this stage." South Korea's trade ministry said any decision would be at the discretion of SK Hynix, but deals involving "national core technology" would be reviewed by the country's Industrial Technology Protection Act.
Intel has been one of the better chipmakers in the stock market this year, with the stock up 170% as demand for its server central processing units (CPUs) and custom AI chips has grown. The company is seeking to build a foundry business to take market share from Taiwan Semiconductor Manufacturing. In July, it signed its first major deal to make next-generation security chips for Fortinet.
However, its foundry business lost $2.1 billion in the second quarter. The Trump administration, which took a 9.9% equity stake in Intel last year, has been pushing chipmakers to move manufacturing operations to the U.S. TSMC plans to invest $265 billion in its Arizona manufacturing facilities, and Intel is continuing to invest in its Ohio plants.
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