Intel stock (NASDAQ: INTC) jumped 5.2% in premarket trading on Wednesday after Reuters reported that SK Hynix is discussing a deal that could bring memory-chip production to Intel’s long-delayed Ohio manufacturing site.
The talks are exploratory, but they go directly to the biggest question hanging over Intel’s turnaround: whether the company can attract enough outside volume to make its manufacturing footprint economically viable.
Under one scenario, SK Hynix could lease part of Intel’s Ohio facility, while another option could involve a venture with Intel and major cloud companies seeking secure memory supplies.
SK Hynix could give Intel something it badly needs: scale
Intel has spent years and tens of billions of dollars trying to build a credible alternative to TSMC, but advanced manufacturing only works financially when expensive fabs are heavily utilised.
Intel’s Ohio project was announced in 2022 as part of a US manufacturing push, but production at its first two plants has been pushed back to 2030 and 2031.
Bringing in SK Hynix could help fill capacity and reduce Intel’s financial burden. Reuters reported that a deal could involve either leasing space or a broader venture tied to cloud customers.
The report also lands during a memory shortage driven by AI demand. SK Hynix is the leading supplier of high-bandwidth memory, giving any US manufacturing arrangement strategic weight.
Still, the talks are preliminary and no structure has been agreed.
Wall Street was already betting on the scale story
The market’s reaction fits a bullish thesis analysts had started building before Wednesday’s report.
Tigress Financial raised its Intel price target to $145 from $118 on Tuesday while maintaining a Buy rating, describing the company as being in an “accelerating AI-driven turnaround”.
The new target implies nearly 50% upside from Intel’s Tuesday close of $97.14. That is far more bullish than the broader analyst consensus target of about $115.74.
Tigress highlighted stronger Xeon demand, improving 18A execution, operating leverage and Intel’s Terafab partnership as reasons manufacturing economics could improve.
Northland Securities made a similar argument earlier this month. Analyst Gus Richard upgraded Intel to Outperform with a $120 target after seeing “material progress” in the turnaround.
Northland said Terafab could “materially benefit Intel’s foundry business” by providing the scale its process technology footprint has historically lacked.
SK Hynix potentially using Intel capacity gives investors another route to that outcome.
A 290% rally leaves little room for another false start
The challenge is that Intel shares have already risen about 292% over the past year.
That first rally reflected investors becoming less pessimistic about Intel’s manufacturing execution and CPU business.
The next phase requires evidence that new partnerships translate into higher utilisation and profits.
There are also obstacles to the SK Hynix talks.
As per reports, Seoul could scrutinise any transfer of advanced DRAM or HBM production because those technologies are strategically sensitive. Manufacturing chips in the US is also more expensive than in South Korea.
Piper Sandler analyst David O’Connor recently initiated Intel at Neutral with a $110 target and said he would “wait for a better entry point”, according to TipRanks.
That caution matters after such a powerful rally. Intel now trades at a valuation that increasingly assumes its turnaround will work.