Intel Might Get Bailed Out by Its Own Rival

Keypoints:

• SK Hynix is in early talks with Intel to manufacture memory chips on US soil for the first time
• One option involves SK Hynix leasing space at Intel's Ohio chipmaking facility
• Another option involves a joint venture including major cloud computing firms
• The talks come as a global memory chip shortage tied to AI data center demand intensifies
• US Commerce Secretary Howard Lutnick has threatened tariffs up to 100% on firms that don't boost US production

South Korea's SK Hynix is in early talks with Intel about manufacturing memory chips on US soil for the first time, according to Reuters reporting citing three people familiar with the discussions. One option under consideration is SK Hynix leasing cleanroom space inside Intel's long-delayed $28 billion Ohio fabrication site, the New Albany mega-site whose two planned plants have already slipped to 2030 and 2031. A second option involves forming a joint venture with Intel and major cloud computing firms hoping to lock in a secure memory supply of their own.

The deal would be a meaningful win for both companies, in different ways. It would relieve real financial pressure on Intel, which has struggled to fill capacity at a facility built for far more production than it currently uses. 

For SK Hynix, the world's second-largest memory chipmaker behind Samsung, it would mark its first domestic US manufacturing footprint, positioning it closer to the American AI data center customers driving a worsening shortage of high-bandwidth memory, the specialized chips used in AI accelerators. Currently, Micron is the only company fabricating memory silicon wafers inside the US at all, meaning a completed deal would break years of foreign dependence for next-generation memory production.

Political pressure is pushing the talks along too. US Commerce Secretary Howard Lutnick has threatened tariffs as high as 100% on South Korean and Taiwanese chipmakers that don't commit to expanding US production. That's created a genuine bind for SK Hynix, caught between Washington's push for domestic manufacturing and Seoul's own push to keep advanced chipmaking technology, and the jobs that come with it, inside South Korea. 

Any transfer of advanced memory technology, including high-bandwidth memory or standard DRAM, would also need to clear a formal review under South Korea's Industrial Technology Protection Act, since Seoul treats the underlying manufacturing know-how as a protected national asset.

Cost adds another layer of friction. Building and running semiconductor plants in the US costs considerably more than in South Korea, driven by higher labor and construction expenses and a supply chain still concentrated across Asia. Both Intel and SK Hynix shares jumped more than 3% to 4% on the initial report, though sources cautioned the talks remain exploratory, with SK Hynix confirming only that it's "exploring various options to strengthen its global competitiveness" and that "no specific plans or arrangements have been finalized at this time.