Intel Stock Investors Should Pay Attention to This Potential SK Hynix Deal

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 Reuters 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.

SK Hynix is a leading manufacturer of memory chips and is known for supplying advanced high-bandwidth memory (HBM) used in AI accelerators.

Image source: Intel.

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.

There's a significant obstacle to an Intel-SK Hynix deal

Before any such agreement is reached, SK Hynix would need to get approval from South Korea -- and that could pose difficulties, according to the Reuters 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 Reuters 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 a hot stock, but it needs a win

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. Construction of Intel's plants is scheduled to be completed in 2030 or 2031.

What would a deal mean for Intel?

While a partnership with SK Hynix wouldn't represent the foundry business that Intel badly wants, it would help the company monetize its investment in the Ohio campus, which could eventually reach $100 billion.

It would also build on the turnaround in Intel stock, which is up more than 300% in the last year. CEO Lip-Bu Tan slashed the workforce by more than 20% in 2025 and backed away from planned projects in Germany and Poland to right-size the company. The stock's rise has been extraordinary since the U.S. converted $8.9 billion in grants to take an equity stake in the chipmaker as part of its emphasis on growing the domestic tech industry.

Intel had second-quarter revenue of $16.1 billion, but reported an $11 billion net loss because it set aside $12.5 billion for escrowed shares that will be released to the Department of Commerce as it performs and receives federal grant money.

However, investors should remember that the negotiations are preliminary and the deal will likely face scrutiny from the South Korean government. But if Intel can find a way to generate positive returns from its Ohio plant -- whether it's foundry work or leasing to a company like SK Hynix -- then it's a win for Intel stock investors.

Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fortinet, Intel, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.