Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË  
 
Tel: +32 229- 91111. Fax: +32 229- 64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu.   EUROPEAN COMMISSION  
Brussels, 20.05.2021  
C(2021) 3764 final  
 
PUBLIC VERSION 
 
SK Hynix Inc. 
2091, Gyeongchung -daero, Bubal -eub 
Icheon-si, Gyeonggi -do, 17336  
Republic of Korea  
Subject : Case M. 10059 – SK hynix/Intel’s NAND and SSD business  
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004
1 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 13 April 2021, the European Commission received notification of a proposed 
concentration (the “Transaction”) pursuant to Article 4 of the Merger Regulation by 
which SK Hynix  Inc. (“SK hynix" , South Korea) acquires within the meaning of 
Article 3(1)(b) of the Merger Regulation sole control of the NAND and solid -state 
drive business   of Intel  (the “Target Business”)3. SK hynix is designated hereinafter 
as the “Notifying P arty”, SK hynix and the Target Business together as the “Parties” . 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the ’ Merger Regulation ’). With effect from 1 December 2009, the Treaty on the 
Functioning of the European Union ( ‘TFEU ’) has introduced certain changes, such as the replacement of  
‘Community ’ by ‘Union’  and ‘ common market ’ by ‘internal market ’. The terminology of the TFEU will be 
used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’). 
3  Publication in the Official Journal of the European Union No C 139, 20.04.2021, p. 8.  
In the published version of this decision, 
some information has been omitted pursuant 
to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non -disclosure of 
business secrets and other  confi dential 
information. The omissions are show n thus 
[…]. Where possible the information 
omitted has been replaced by ranges of 
figures or a general description.  
 
2 1. THE PARTIES  
(2) SK hynix is active in the man ufacturing and marketing of semiconductor products. SK 
hynix is headquartered in the Republic of Korea and originally founded its 
semiconductor business in 1983 as Hyundai Electronic Industrial Co., Ltd. Today, SK 
hynix primarily designs and manufactures m emory storage devices such as Dynamic 
Random Access Memory (“DRAM”), NAND (meaning “not AND”) flash memory 
and NAND-based Solid -State Drives (“ SSDs ”), as well as system semiconductors 
such as Complementary M etal-Oxide-Semiconductor (“CMOS”) image sensors.  
(3) The Target Business is active in developing, designing, manufacturing, assembling, 
testing, marketing and selling products utilizing the NAND flash memory technology. 
The Target Business is also active in developing, designing, manufacturing, 
assembling, testing, marketing and selling SSDs that utilize NAND flash memory 
technology.  
2. THE OPERATION  
(4) The notified T ransaction concerns the acquisition by SK hynix of the NAND and SSD 
business of Intel. It will be implemented by means of a Master Purchase Agreement  
(the “MPA”) entered into on 19 October 2020 by the Parties  and will be completed in 
two steps. At the first closing , SK hynix will acquire Intel’s NAND Fabrication 
(“Fab”)  Assets through a wholly-owned subsidiary to be organized in China 
(“FabCo”) and, through another wholly-owned subsidiary (“SSDCo”), it will acquire 
Intel’s  SSD Business Assets. Intel’s remaining NAND operations  will be transferred 
to one or more wholly-owned subsidiaries of Intel (“OpCo” ). At the second closing,  
SK hynix will acquire all  of Intel’s remaining NAND Business Assets by way of an 
acquisition of the equity interests in OpCo from Intel.  
(5) Therefore, the Transaction constitutes a concentration within the meaning of Article  3(1)(b) of the Merger Regulation.  
3. U
NION  DIMENSION  
(6) The undertakings concerned have a combined aggregate world-wide turnover of more 
than EUR 2 500 million  (Parties:  […])4. In each of at least three Member States, the 
combined aggregate turnover of the Parties is more than EUR 100 million ([…]). The 
aggregate turnover of each Party is more than EUR 25 million in each of the Czechia  
([…]), the Netherlands ([…]) and Poland ([…]). Each of the Parties  has a  Union- wide 
turnover in excess of EUR 100 million  ([…]), but they do not achieve more than two-
thirds of their aggre gate U nion-wide turnover within one and the same Member State. 
The notified operation therefore has a U nion dimension pursuant  to Article  1(3) of the 
Merger Regulation.  
4. RELEVANT MARKETS  
4.1. Introduction to flash memory and data storage solutions  
(7) The Transacti on relates to flash memory and data storage solutions. Data storage 
solutions allow for the creation, management and preservation of digital content. They are used in a variety of information technology  (“IT”) devices and applications, such 
                                                 
4  Turnover calculated in accordance with Article 5 of the Merger Regulation . 
 
3 as personal com puters, servers, and other business storage systems as well as in 
industrial and consumer electronic applications, such as digital video recorders, 
gaming devices and automotive applications. Data storage solutions used in these 
devices and applications include SSDs, Hard Disk Drives (" HDDs"), memory cards, 
USB flash drives and embedded flash storage. 
(8) Data storage solutions require computer memory, i.e. components and recording 
media, to retain digital data. There are two types of computer memory: volatile and non-volatile memory. Volatile memory (such as random access memory, " RAM"), 
retains the stored information only while powered. By contrast, non-volatile memory 
can retain information after having been power cycled (i.e., turned on and off). 
Volatile me mory comes in two main types: Static Random Access Memory (" SRAM ") 
and DRAM.  
(9) Flash memory  is a type of non-volatile storage technology that stores data in 
transistors and that does not require power to retain data. Flash memory uses two 
different technolog ies to map and store data , NAND and NOR . The names refer to the 
type of logic gate used in each memory cell ("Not AND" and "Not OR"). Contents of 
NOR memory can be read more rapidly than the contents of NAND, while data can 
be written to NAND more rapidly than to NOR.  
(10) An SSD is a storage solution that uses NAND flash memory to store digital data.
5 The 
NAND flash memory is a key input for SSDs. The other main components of an SSD are the controller and the interface. The controller is a chip that directs mem ory 
reading, writing, and certain other functions (in other words, it manages how and where data is stored on the memory chips within the SSDs). The interface is the 
connection between the storage unit and the computer or system where it is inserted. 
It consists of a physical layer, the physical interconnector, and a logical layer, the 
protocol used to structure the communication. 
(11) The notified Transaction concerns the following three types  of data storage that are 
used in the value chain  described above : 
(a) DRAM: a type of non-volatile memory, that can retain memory after having 
been power cycled, used in data and graphic processing applications in data centres as well as in a wide array of IT devices for consumer applications – where only SK hynix is active;  
(b) NAND: flash memory (a type of non-volatile semiconductor media) used for 
data storage in consumer devices, enterprise systems, and industrial 
applications – where both SK hynix and the Target Business are active; and  
(c) SSDs: a type of storage solution used i n IT devices and applications, which are 
based on flash memory – where both SK hynix and the Target Business are 
active.  
(12) In addition to the activities set out above, SK hynix also designs “CMOS” image 
sensors and managed NAND .  
                                                 
5  Contrary to an SSD that uses NAND flash memory, an HDD is a storage solution that uses one or more 
rotating metal or glass disks with magnetic surfaces to store  and allow access to data. A read/write head on 
a moving actuator arm accesses the data while the disk is spinning.  
 
4 (13) CMOS image sensors are non-m emory semiconductors that serve the role of digital 
film in many IT devices. They are found in several types of electronic components, 
including microprocessors, batteries, and digital camera image sensors, and are mainly 
used in digital cameras, smartphones and miniature medical imaging systems. The 
Target Business is not active in this field or in markets that are upstream or 
downstream of CMOS image sensors .  
(14) Managed NAND is a product that combines NAND and a controller, or both a 
controller and DRAM. Ma naged NAND is commonly used in mobile phones, and to 
a lesser extent in tablets and low -grade laptops (the primary form of storage in laptops 
and PCs is hard drives and SSDs). It is available in different types:  
(a) Embedded MultiMedia Card ("eMMC") is a small  storage device that 
incorporates NAND flash memory and a simple storage controller on a single 
integrated circuit. It is commonly used in portable devices, such as tablets and 
mobile phones, as a low -cost method of providing primary internal storage. 
eMMC  can also be used in on-board vehicle entertainment and navigation 
systems. The next generation of eMMC is Universal Flash Storage ("UFS"). It is a high performing integrated circuit with higher memory capacity and 
optimized performance for multithreaded a pplications. As a result, it is 
currently used in high-end smartphones only.  
(b) Embedded Multi -Chip Memory ("eMCP") is Multi -Chip -Package comprising 
eMMC and DRAM. It is typically used in basic smartphones or non-
smartphones/utility phones given its lower cos t. uMCP is a new solution 
comprising UFS and DRAM and expects to utilize UFS's fast speed and MCP's advantages in occupying a smaller foothold area in printed circuit boards and 
in reducing phone makers’ effort in system design.  
(15) The Target Business is not  active in managed NAND. In addition, as explained further 
in Section 5.5, even though NAND is an input for managed NAND products, the 
Target Business' NAND cannot be integrated into SK hynix's current managed NA ND 
products. 
4.2. Product market definition  
4.2.1. DRAM  
4.2.1.1. Previous Commission decisions  
(16) In past decisions, the Commission examined whether it was necessary to differentiate 
between the different types of DRAMs. In particular, the Commission considered 
whether commodity DRAMs, used as components for personal computers, and high-
speed DRAMs, used in high -performance servers and workstations , are separate 
product markets but ultimately left the market definition question open.
6 
(17) In JV.44 Hitachi/NEC —  Dram/JV , the Commission  considered that DRAMs could 
be differentiated according to the memory size (e.g. the quantity of data that can be 
stored on the chips), their intended application (FPM -DRAM, EDO-DRAM, SDRAM, 
or RDRAM) or the type of the final product where they are instal led: servers, PCs, 
                                                 
6  Case IV/J V22 Fujitsu/Siemens , paragraph 41.   
 
5 mobiles, games, network devices, PC peripherals, and others. However, it was not 
necessary to further delineate the relevant product markets in the context of that case.7 
(18) From the demand-side, the Commission found that the same type of D RAMs is 
available to customers as DRAMs are commodity products with standardized 
specifications.8 From the supply side, the Commission considered that manufacturers 
are able to switch between different functional types of DRAM due to similar 
production tec hnologies, but that switching between different generations of DRAM 
required significant technology investment costs and important production ramp-up 
time.9 
4.2.1.2. Notifying Party’s view  
(19) The Parties agree with the Commission’s past practice that DRAMs are commodi ty 
products with standardized specifications, and that DRAM manufacturers are able to 
switch between different functional types of DRAM due to similar production 
technologies. However, the Parties submit that the precise product market definition 
can be le ft open in this case given that the proposed Transaction will not raise 
competition concerns irrespective of the precise product market definition.10 
4.2.1.3. The Commission’s assessment  
(20) The market investigation confirmed that commodity DRAMs, used as components for  
personal computers, and high-speed DRAMs, used in high-performance servers and 
workstations , are separate product markets.11  
(21) As regards further segmentations, the results were not clear for a segmentation 
according to the memory size as the majority of the respondents did not have sufficient 
information to assess whether this market segmentation would be possible.12 In 
addition, the majority of respondents to the market investigation took the view that 
DRAM should not be further segmented into distinct product markets on the basis of 
its intended application into: (i) FPM -DRAM, (ii) EDO -DRAM, (iii) SDRAM, and 
(iv) RDRAM.13 On the contrary, the respondents to the market investigation 
confirmed that the DRAM market should rather be further segmented on the basi s of 
the type of final product where it is installed into (i.e. (i) servers, (ii) PCs, (iii) mobiles, 
(iv) games, (v) network devices, (vi) PC peripherals, and others ).14 
4.2.1.4. Conclusion on product market definition  
(22) For the purpose of this decision and in light of the results of the market investigation, the Commission will assess the overall product market for DRAM as including all  
possible narrower markets , i.e. the market for commodity DRAMs, and the DRAM 
market s for (i) servers, (ii) PCs, (iii) mobiles, (iv) games, (v) network devices, (vi) PC 
                                                 
7  Case JV.44 Hitachi/NEC —  Dram/JV , paragraphs 15 and 16.   
8  Case JV.44 Hitachi/NEC —  Dram/JV , paragraph 18.  
9  Case JV.44 Hitachi/NEC —  Dram/JV , paragraph 19.  
10  Form CO, paras. 6.286 – 6.287. 
11  Replies to Questionnaire, question 5.  
12  Replies to Questionnaire, question 6.  
13  Replies to Questionnaire, question 7.  
14  Replies to Questionnair e, question 8.  
 
6 peripherals, and others . In any event , the market definition can be left open as the 
above  market segmentation s do not impact the outcome of the competitive assessment 
of the Transaction. 
4.2.2. NAND flash memory  
4.2.2.1. Previous Commi ssion decisions  
(23) The Commission previously considered a separate market for NOR and NAND.15 The 
Commission found that NOR and NAND should be distinguished due to low supply-
side substitutability between the types of flash memory. Many suppliers were not 
active in the whole flash memory spectrum and would incur significant costs and risks 
switching from one memory type to another. On the demand-side, the Commission 
noted the different end- applications of NOR and NAND and the significant switching 
cost for cons umers.16 In its most recent decision concerning NAND , the Commission 
took the view that NAND formed a distinct product market, on the basis that NAND 
and NOR flash memory have different characteristics and are used in different 
applications.17 
(24) The Commission has also previously considered whether NAND should be further 
distinguished by 2D and 3D NAND and ultimately left the product market definition open.
18 The differences between 2D NAND and 3D NAND in terms of technology, 
price and capacity were not considered sufficient to conclude that they constitute two 
separate product markets.  
4.2.2.2. Notifying Party’s view  
(25) The Notifying Party considers19 that 2D NAND is being increasingly displaced by 3D 
NAND for many applications, due to the constant effort  to reduce the size of chips and 
the need to increase storage capacity. Moreover, today the cost per GB of 2D NAND is several times higher than that of 3D NAND. 2D NAND flash memory today 
accounts for a very limited portion of NAND flash memory and has virtually been 
displace d by 3D NAND flash memory. Competition between NAND suppliers is 
focused on 3D NAND, and 2D NAND production remains only for niche applications to fulfill product warranty requirements. This displacement is illustrated by the 
evolution of NAND in smartphones. Until 2016, all smartphones used 2D NAND; 
since 2017, both 2D and 3D NAND devices have been used on smartphones. Today's 
Samsung Galaxy and Apple's iPhone utilize only 3D NAND. As such, suppliers have 
already, or are in the process of phasing out 2D NA ND. 
(26) The Notifying Party submits that the Transaction will not result in any competition concerns, irrespective of whether 2D NAND and 3D NAND are considered part of the 
same or separate product markets. The Target Business is no longer active in 2D 
                                                 
15  Case M.4751 – STM/Intel/JV, paragraphs 16 and 20; and Case M.5804 – Samsung Electronics/Samsung 
Digital Imaging, paragraphs 20 -23. 
16  Case M.4751 – STM/Intel/JV, paragraphs 13-  15. 
17  Case M.7772 – Western Digital/SanDisk, paragraph 64.  
18  Case M.7772 – Western Digital/SanDisk, paragraph 66.  
19  Form CO, paras 6.58- 6.62. 
 
7 NAND, while the Parties' combined position in 3D NAND is very similar to their 
combined position in the overall NAND segment. 
4.2.2.3. The Commission’s assessment  
(27) The market investigation confirmed the existence of separate markets for each of NOR 
and NAND.20  
(28) As regards t he existence of separate markets between 2D and 3D NAND, the market 
investigation was inconclusive. From a demand-side perspective, t he majority of the 
respondents explained that 2D and 3D NAND are substitutable .21 However, from a 
supply-side perspective, the majority of the respondents confirmed that a supplier 
could not rapidly switch manufacturing and supplying between 2D NAND and 3D 
NAND without incurring significant investment.22 The market investigation 
confirmed that 2D NAND is an older, legacy technol ogy that is being used 
decreasingly  because it has capacity limitations. 3D NAND technology on the other 
hand allows stacking which increases capacity and reduces cost. Lastly, the market investigation confirmed that there are no other relevant segmentations within the 
overall NAND market.
23 
4.2.2.4. Conclusion on product market definition  
(29) For the purpose  of this decision  and in light of the results of the market investigation, 
the Commission will assess the overall product market for NAND as including the 
possible markets  for 2D and 3D  NAND.  In any event the market segmentation into 
2D and 3D NAND does not impact the outcome of the competitive assessment of the 
Transaction and the market definition can be left open.  
4.2.3. Storage – segmentation based on technology (HDDs v s. SSDs)  
4.2.3.1. Previous Commission decisions  
(30) With regard to storage solutions, i n its decisional practice, the Commission has 
analyzed potential segmentations based on technology (HDD s vs. SSDs), on intended 
use (enterprise vs. client storage), on interface (SAT A, SAS, PCI). Each of these 
potential segmentations are discussed in detail below.  
(31) The Commission has also found in its previous decisions that HDDs and SSDs did not belong to the same relevant product markets, neither for enterprise use nor for client 
use
24 due to the significant price difference between the two technologies and the 
limited storage capacity of SSDs relative to HDDs.25 The Commission, however, 
noted that SSDs and HDDs could be substitutes for some enterprise applications, for 
instance in the  case of low -performance SSDs which could be substitutable with high -
                                                 
20  Replies to Questionnaire, question 10.  
21  Replies to Questionnaire, questions 10.3 and 10.4.  
22  Replies to Questionnaire, questions 10.5 and 10.6.  
23  Replies to Questio nnaire, question 11.  
24  See also Commission decision of 19 October 2011 in Case M.6214 – Seagate Technology/The HDD 
Business of Samsung Electronics, recitals 256 -259; and Commission decision of 23 November 2011 in Case 
M.6203 – Western Digital Ireland/Vivi ti Technologies, recitals 362- 365. 
25  See Case M.7772 – Western Digital/SanDisk, para. 26 . 
 
8 performance HDDs.26 In its most recent decision on HDDs and SDDs, the 
Commission noted the long term trend whereby HDDs are being displaced by SSDs 
and left open the question as to whether HDDs and SSDs belong to the same product 
market with respect to client applications. It however concluded, albeit for the sole 
purpose of that decision, that HDDs and SSDs belonged to separate product markets 
with respect to enterprise applications.27 
4.2.3.2. Notifying Party’s view  
(32) The Notifying Party considers that, s ince the adoption of the most recent Commission 
decision regarding these product areas (Western Digital/SanDisk in 2016), SSDs have 
rapidly expanded in both client and enterprise applications, at the expense of HDDs. 
Although HDDs still offer a cost advantage per GB, SSDs benefit from better 
performance, speed, lower power consumption and increased durability, which 
ultimately leads to several cases where the total lifetime cost of using an SSD is in f act 
comparable or lower than that of using an HDD. SSDs have also grown in storage capacity. For example, […].
28 
4.2.3.3. The Commission’s assessment  
(33) The market investigation confirmed the segmentation by technology into HDD and SSD.
29 In particular, from the demand-side, the majority of market participants takes 
the view that SSD and HDDs are not substitutable , as HDD customers seek large 
capacity storage at the lowest per GB price and SSD is used in lower capacity storage 
with higher performance . According to the re sults of the market investigation, if 
substitution occurred between HDDs and SSDs, it would go primarily in the direction 
of SSDs replacing HDDs.30  
(34) From the supply-side, it is  considered that suppliers cannot switch manufacturing and 
supplying between HDDs  and SSDs rapidly and without incurring significant 
investment as the production process for HDDs is different from that of SSDs and they 
cannot be produced on the same production lines.31 
4.2.3.4. Conclusion on product market definition  
(35) For the purpose of this deci sion and in light of the results of the market investigation, 
the Commission will assess the product markets for SSDs and HDDs32 separately . In 
any event the market  the market definition can be left open as the  segmentation into 
SSDs and HDDs does not impac t the outcome of the competitive assessment of the 
Transaction. 
                                                 
26  See Case M.7772 – Western Digital/SanDisk , para 28. 
27  See Case M.7772 – Western Digital/SanDisk , para. 35. 
28  Form CO, para. 6.66.  
29  Replies to Questionnaire, q uestion 15.  
30  Replies to Questionnaire, question 13.  
31  Replies to Questionnaire, question 14.  
32  Considering that neither party is active in HDDs, this market will not be discussed separately in this 
decision. See Form CO, para. 6.65, footnote 115.  
 
9 4.2.4. Storage – segmentation based on intended use (enterprise vs. client storage)  
4.2.4.1. Previous Commission decisions  
(36) Previously, the Commission found a distinction between enterprise and client storage 
because enterprise storage generally requires higher performance and superior 
endurance, compared to client storage .33 The Commission has however noted that in 
some cases, client SSDs can be used for enterprise applications that do not require a 
high workload.34 
4.2.4.2. Notifying Party’s view  
(37) The Notifying party takes the view that enterprise SSDs are generally used in high workload environments, such as servers and corporate datacenters, while client SSDs 
are deployed in consumer devices (including tablets, smartphones) or systems (such 
as desktop PCs, notebooks, gaming consoles).  
(38) The main customers of enterprise SSDs include OEMs (e.g. producers of enterprise 
computers or storage systems such as Dell and Oracle) and ODMs (original design 
manufacturers, which produce  computer or storage systems on behalf of OEMs and 
hyperscalers); end user customers that often purchase SSDs directly from 
manufacturers for use in "hyperscale" distributed computing environments, such as 
Facebook, Google, Amazon Web Services, Microsoft, Baidu, Alibaba and Tencent, as well as other large end -users; and distributors that serve smaller OEMs.  
(39) Client SSD customers include OEMs such as Apple, Sony, Dell, Lenovo, HP and 
others, which incorporate SSDs into consumer products (PCs, tablets, storage  
devices); ODMs such as Quanta, Compal, Wistron and others; end consumers, who 
purchase client SSDs from client SSD suppliers or from standard electronics hardware stores; and distributors.  
4.2.4.3. The Commission’s assessment  
(40) The market investigation confirm ed that the market for storage products should be 
segmented by intended use into: (i) enterprise (eSSDs) and (ii) client (cSSDs).
35 
(41) From the demand-side, client storage and enterprise storage are not subs titutable . 
Client storage products do not typically have the same price point, components, form 
factor, or performance specification as enterprise products.36 From the supply- side, 
the respondents indicated that it would be relatively easy for a supplier to switch 
manufacturing between client storage and enterprise  storage and start supplying 
eSSDs or cSSDs rapidly and without incurring significant investment.37 
4.2.4.4. Conclusion on product market definition  
(42) For the purpose of this decision and in light of the results of the market investigation, 
the Commission will assess the product markets for enterprise and client SSDs as 
separate markets . In any event the market  definition can be left open as the 
                                                 
33  See Case M.7772 – Western Digital/SanDisk , paragraph 24.  
34  See Case M.7772 – Western Digital/SanDisk , paragraph 24.   
35  Replies to Questionnaire, question 18.  
36  Replies to Questionnaire, question 16.  
37  Replies to Questionnaire, question 17.  
 
10 segmentation into enterprise and client SSDs does not impact the outcome of the 
competitive assessment of the Transaction. 
4.2.5. Enterprise storage – segmentation based on interface  (SATA vs. SAS  vs. PCIe) 
4.2.5.1. Previous Commission decisions  
(43) In its most recent decision regarding SSDs, the Commission found that  enterprise 
SSDs with different interfaces have different endurance, reliability, latency and price, 
and are used for different end uses and applications. Ultimately, the Commission left 
open the question of whether enterprise SSDs should be further segmented by 
interface.38 In its previous decisions regarding HDDs, the Commission considered the 
different interfaces of HDDs to be relevant in the definition of the relevant product 
markets.  
4.2.5.2. Notifying Party’s view  
(44) The N otifying Party submits that in recent years, Peripheral Component Interconnect 
Express (“ PCIe ”) eSSDs have been increasingl y outperforming and replacing  Serial 
Advanced Technology Attachment  (“SATA ”) eSSDs for enterprise applications. This 
trend is mainly driven by a decrease in price of NAND flash memory, which has 
resulted in lower prices for better performing PCIe e SSDs, as well as in an increase in 
the performance of PCIe eSSDs, which are gradually exceeding the maximum 
throughput of SATA and Serial -Attached SCSI  (“SAS”) eSSDs (except for newer 
versions of SAS). Moreover, due to their scalability, PCIe e SSDs can be used for both 
lower -cost, mainstream performance purposes, as well as for higher-cost, higher-
performance purposes. Thus, in recent years, PCIe e SSDs are replacing both SATA 
and a portion of SAS e SSDs, especially among customers looking to purchase new 
systems (fo r whom potential interface incompatibility issues have no real 
significance).  
(45) The Notifying Party submits that there are several competitors in the overall SSD 
market and not all of them are active in all three categories mentioned above. 
Indicatively, the  biggest players are active in all three, while the Parties are only active 
in eSSD SATA and eSSD PCIe.  
(46) Ultimately the decision to use PCIe eSSDs, SAS eSSDs or SATA e SSDs primarily 
depends on the performance requirements of the individual customer, and wi ll be 
attenuated by their degree of price sensitivity, and their willingness to incur the cost of switching. For example, a more cost -sensitive enterprise customer might be willing 
to sacrifice higher speeds and reliability for a cheaper price and would therefore purchase SATA e SSDs over PCIe e SSDs (the former is cheaper and slower, relative 
to PCIe eSSDs).  
4.2.5.3. The Commission’s assessment  
(47) The results of the  market investigation are not clear as to whether  the m arket for eSSDs 
should be segmented by interface into  (i) SATA, (ii) SAS and (iii) PCIe .
39  
                                                 
38  See Case M .7772 – Western Digital/SanDisk , para. 54. 
39  Replies to Questionnaire, question 19.  
 
11 (48) From the demand-side, the different interfaces for eSSDs were in general not 
considered to be substitutable . Some respondents take the view that customers show 
strong interface preferences in the eSSDs they buy and s ystems designed for a specific 
interface would need to be modified to switch to another interface of eSSDs. Based 
on this, it can be deemed that there is limited scope for substitution of eSSDs with 
different interfaces. Nevertheless, other respondents took the view that all eSSDs 
could be considered interchangeable with respect to the fact that they perform the same 
general function. However, they recognized that  differences in performance based on 
interface exist (e.g., for example PCIe is faster than SAT A). The possibilities for 
substitution depend on the specific server or storage device that requires eSSDs, as 
there is a need to have matching interface connectors on the motherboards of such systems in order for them to match with the specification of the eSSD.
40 
4.2.5.4. From the supply-side, the replies of the respondents were mixed as regards the ability 
of a supplier to switch manufacturing and supplying between the different interfaces 
for eSSDs rapidly and without incurring significant investment. In particul ar, the 
responses to the market investigation indicate that  if a supplier has developed eSSDs 
with different interfaces, switching between manufacturing one interface eSSD and 
another generally does not require significant effort or expense  as different interface 
SSDs are easy to develop. This is because the components used for eSSDs are 
common across interfaces. In particular, the NAND flash memory chip component 
is common and once the supply of NAND is secured, the other components in an 
eSSD such as cont rollers and firmware are available from third parties or can be 
designed and manufactured in-house.41 Conclusion on product market definition  
(49) For the purpose of this decision and in light of the results of the market investigation, 
the Commission will asses s the product markets for PCIe e SSDs, SAS eSSDs or 
SATA eSSDs as separate markets. In any event, the market definition can be left open 
as the segmentation into enterprise and client SSDs does not impact the outcome of 
the competitive assessment of the Tra nsaction. 
4.3. Geographic market definition  
4.3.1. DRAM  
4.3.1.1. Previous Commission decisions  
(50) In its previous decisions concerning the markets for DRAMs and flash memories, the Commission took the view that the geographic scope of all possible products markets 
is worldwide.
42 
4.3.1.2. Notifying Party’s view  
(51) The Notifying party has not taken a view regarding the geographic scope of the DRAM 
market . 
                                                 
40  Replies to Questionnaire, question 19.1.  
41  Replies to Questionnaire, question 19.2.  
42  See case COMP/JV.44, Hitachi/NEC -DRAM/JV of 3 May 2000 and case COMP/M.4751, STM /Intel/JV of 
10 August 2007.  
 
12 4.3.1.3. The Commission’s assessment  
(52) The market investigation has confirmed that the market for DRAMs and all its possible 
segmentations is worldwide.43 
4.3.1.4. Conclusion on geographic market definition  
(53) In light of the results of the market investigation, the Commission will assess the worldwidemarket for DRAM  including all its possible narrower markets, i.e. the 
market for commodity DRAM ,.and DRAM on the basis  of the type of final product 
where it is installed into: (i) servers, (ii) PCs, (iii) mobiles, (iv) games, (v) network devices, (vi) PC peripherals and others. 
4.3.2. NAND flash memory  
4.3.2.1. Previous Commission decisions  
(54) The Commission has previously concluded that the geographic market for NAND 
flash memory is global in scope.
44 
4.3.2.2. Notifying Party’s view  
(55) The Notifying Party submits that the geographic market for NAND, 2D NAND and 
3D NAND is worldwide in scope.45 
4.3.2.3. The Commission’s assessment  
(56) The market investigation confirme d that the geographic market for NAND (and also 
2D and 3D NAND) is worldwide in scope.46 
4.3.2.4. Conclusion on geographic market definition  
(57) In light of the results of the market investigation, the Commission will assess the overall worldwide market for NAND, includ ing 2D and 3D NAND.  
4.3.3. Storage – segmentation based on technology (HDDs vs. SSDs), segmentation based 
on intended use (enterprise vs. client storage), segmentation based on interface (SATA 
vs. SAT vs. PCIe) 
4.3.3.1. Previous Commission decisions  
(58) In the Commission's previous decisions, the geographic market for SSDs (including 
any puta tive narrower markets  thereunder) was considered to be  worldwide in scope, 
because (i) transport costs do not play a significant role and amount to less than 1% of 
total product cost; (ii) there are no significant barriers to trade; (iii) prices do not 
typically differ by region; (iv) products and product features do not differ by region; 
(v) manufacturers are active on a global basis (thus competitors tend to be the same 
                                                 
43  Replies to Questionnaire, question 9.  
44  Case M.7772 – Western Digital/SanDisk, paragraph 72.  
45  Form CO, para 6.79.  
46  Replies to Questionnaire,  question 12.  
 
13 regardless of the regions taken into consideration); and (vi) the market players  decide 
their strategy on a global level.47 
4.3.3.2. Notifying Party’s view  
(59) The Notifying Party agree s with the Commission’s previous decisions that the market 
for SSDs is worldwide.  
4.3.3.3. The Commission’s asse ssment  
(60) The market investigation confirms that the market for SSDs and all its possible 
segmentations is worldwide.48 
4.3.3.4. Conclusion on geographic market definition  
(61) In light of the results of the market investigation, the Commission will assess the 
worldwide market for SSDs  and all its possible segmentations . 
5. COMPETITIVE ASSESSMEN T 
5.1. Analytical framework  
(62) The Guidelines on the assessment of horizontal mergers (“Horizontal Merger 
Guidelines”)49 describe two main ways in which horizontal mergers may significantly 
imped e effective competition, in particular by creating or strengthening a dominant 
position: (i) by eliminating important competitive constraints on one or more firms, which consequently would have increased market power, without resorting to 
coordinated behaviour (non-coordinated effects); and (ii) by changing the nature of 
competition in such a way that firms that previously were not coordinating their behaviour, are significantly more likely to coordinate and raise prices or otherwise 
harm effective c ompetit ion (coordinated effects
50) as a result of the proposed 
concentration.  
(63) A merger giving rise to horizontal non-coordinated effects might significantly impede 
effective competition by creating or strengthening the dominant position of a single 
firm, one whic h, typically, would have an appreciably larger market share than the 
next competitor post -merger. Moreover, also mergers that do not lead to the creation 
of or the strengthening of a single firm’s dominant position may create competition 
concerns under the  substantive test set out in Article 2(2) and Article 2(3) of the 
Merger Regulation. Regarding mergers in oligopolistic markets, the Merger 
Regulation clarifies that “ under certain circumstances, concentrations involving the 
elimination of important compet itive constraints that the merging parties exerted upon 
each other, as well as a reduction of competitive pressure on the remaining 
competitors, may, even in the absence of a likelihood of coordination between the 
                                                 
47  Case M.7772 – Western Digital/SanDisk , paragraph 69- 72.   
48  Replies to Questionnaire, question 22.  
49  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings (“Horizontal Merger Guidelines”),  OJ C 31, 05.02.2004, 
paragraph  22. 
50  A merger  may also make coordination easier, more stable or more effective for firms which were 
coordinating prior to the merger.  
 
14 members of the oligopoly, result in a significant impediment to effective 
competition”.51 
(64) The Horizontal Merger Guidelines list a number of factors which may influence 
whether or not significant horizontal non-coordinated effects are likely to result from 
a merger, such as the large market shares o f the merging firms, the fact that the 
merging firms are close competitors, the limited possibilities for customers to switch 
suppliers, or the fact that the merger would eliminate an important competitive force. 
Not all those factors need to be present to make significant non-coordinated effects 
likely and it is not an exhaustive list.52   
(65) Further, in some markets, a merger may give rise to coordinated effects where the structure is such that firms would consider it possible, economically rational, and 
henc e preferable, to adopt on a sustainable basis a course of action on the market aimed 
at selling at increased prices.
53 According to the Horizontal Merger Guidelines, 
coordination is more likely where it is relatively simple to reach a common 
understanding on the terms of coordination. Moreover, three conditions need to be met for coordination to be sustainable: (i) the coordinating firms must be able to monitor 
to a sufficient degree whether the terms of the coordination are being adhered to; (ii) 
there must  be some form of credible deterrent mechanism that can be activated if 
deviation is detected; and (iii) the reactions of outsiders as well as customers should 
not be able to jeopardise the results expected from the coordination.
54 
(66) Next to horizontal effects , the Guidelines on the assessment of non-horizontal mergers 
(“Non-Horizontal Merger Guidelines”) set s out that there are also two broad types of 
non-horizontal mergers that can be distinguished: vertical mergers and conglomerate 
mergers.55  
(67) Vertical merger s involve companies at different levels of the supply chain. According 
to the Non-Horizontal Merger Guidelines, non-coordinated effects may significantly 
impede effective competition as a result of a vertical  merger if such merger gives rise 
to foreclosure . Foreclosure occurs where actual or potential rivals’ access to supplies 
or markets is hampered or eliminated as a result of the merger, thereby reducing these 
companies’ ability and/or incentive to compete.56 Such foreclosure may discourage 
entry or expansion of rivals or encourage their exit.57 There are two forms of 
foreclosure: input foreclosure occurs where the merger is likely to raise the costs of downstream rivals by restricting their access to an important input, and customer 
foreclosure occurs wher e the merger is likely to foreclose upstream rivals by 
restricting their access to a sufficient customer base.
58 A vertical  merger could also 
lead to other non- coordinated effects, for instance where the merged entity may, by 
                                                 
51  Merger Regulation, recital 25. Similar wording is also found in paragraph 25 of the Horizontal Merger 
Guidelines.  
52  Horizontal Merg er Guidelines, paragraph 26.  
53  Horizontal Merger Guidelines, paragraph 39.  
54  Horizontal Merger Guidelines, paragraph 41.  
55  Guidelines on the assessment of non- horizontal mergers under the Council Regulation on the control of 
concentrations between under takings (“Non- Horizontal Merger Guidelines”), OJ C 265, 18.10.2008, 
paragraph  3. 
56  Non-Horizontal Merger Guidelines, paragraph 18.  
57  Non-Horizontal Merger Guidelines, paragraph 29.  
58  Non-Horizontal Merger Guidelines, paragraph 30.  
 
15 vertically integrating, gain ac cess to commercially sensitive information regarding the 
upstream or downstream activities of rivals.59 Finally, a vertical  merger may also give 
rise to coordinated effects. 
(68) Lastly, the Non-Horizontal Merger Guidelines focus, besides vertical mergers, on 
conglomerate mergers consisting of mergers between companies that are active in 
closely related markets, for instance suppliers of complementary products or of 
products which belong to a range of products that are generally purchased by the same 
set of custo mers for the same end use.60 
(69) In the majority of circumstances, conglomerate mergers do not lead to any competition concerns but in certain specific cases there may be harm to competition.
61 The main 
concern in the context of conglomerate effects is that of foreclosure.62 Conglomerate 
mergers may allow the merge d entity to combine products in related markets and this 
may confer on the merged entity the ability and incentive to leverage a strong market 
position from one market to another by means of tying or bundling, or other 
exclusionary practices.63 
(70) In assessing the likelihood of conglomerate effects, the Commission examines, first, 
whether the merged entity would have the ability to foreclose its rivals, second, 
whether it would have the economic incentive to do so and, third, whether a foreclosure strategy would have a significant detrimental effect on competition, thus 
causing harm to consumers. In practice, these factors are often examined together a s 
they are closely intertwined.
64 
5.2. Horizontal non -coordinated  effects  
(71) The Commission has investigated and assessed whether the Transaction is likely to 
give rise to a significant impediment to effective competition as a result of non-
coordinated effects  in the markets for (i) 3D NAND65 and (ii) SSDs and the possible 
narrower markets therein  
5.2.1. NAND  
5.2.1.1. Notifying Party’s view  
(72) The Notifying Party takes the view that w ithin NAND, the Parties' activities overlap 
only in 3D NAND.66 The Parties provided  a competitive assessment under all relevant 
NAND segmentations to show that the  proposed Transaction will not raise horizontal 
concerns under any such segmentations. 
                                                 
59  Non-Horizontal Merg er Guidelines, paragraph 78.  
60  Non-Horizontal Merger Guidelines, paragraph 91.  
61  Non-Horizontal Merger Guidelines, paragraph 92.  
62  Non-Horizontal Merger Guidelines, paragraph 93.  
63  Non-Horizontal Merger Guidelines, paragraph 93.  
64  Non-Horizontal Merge r Guidelines, paragraph 94.  
65  For completeness, in this section the Commission assesses the overall market for NAND as well, despite it 
not being technically affected.  
66  Form CO, para. 6.85.  
 
16 (73) The Parties combined market share in the NAND martet (approximately [20-30]%) 
would still be smaller than Samsung’s market share and it would be very closely 
followed by the third competitor, Kioxia. 
(74) The Notifying Party submits that the Parties are not close competitors. They serve to 
a great extent different customers/applications in the NAND segment. More 
specifically, [60-70]% of SK hynix's NAND revenues are derived from NAND flash 
memory mobile phone applications , an area where the Target Business is not 
active. […].67 
(75) According to the Notifying Party, t he Parties face a number of strong, well -resourced 
competitors and new entries are occurring as indicated above in para graph (75) above . 
Chinese competitor YMTC is in the process of implementing significant expansion 
plans and is expected to account for about [5-10]% of global NAND flash memory 
output in 2021, and expand further beyond that to become a leading player in NAND.68  
(76) Moreover, the Notifying Party submits that t here is significant and constant innovation 
in NAND flash memory. In order to remain competitive, NAND flash memory vendors must continue to innovate and scale the number of stacks.
69  
(77) The Notifying Party submits that Parties and their competitors have different costs 
structures, different technological capabilities in terms of increasing the number of 
layers and number of bits per cell, different production capacit ies. . At the same time, 
each of the Parties' rivals have ample financial resources and R&D capabilities to be 
able to exert significant competitive pressure on the Parties and will continue to do so 
post-Transaction.70 
5.2.1.2. The Commission’s assessment  
(78) For the purposes of this decision, the Commission will assess the overall market for NAND including the markets for 2D NAND and 3D NAND. The Commission’s 
market investigation results also concern the overall NAND market and the 3D NAND 
market. The Target Business i s no longer active in 2D NAND, while the Parties' 
combined position in 3D NAND is very similar to their combined position in the 
overall NAND segment. 
(i) Market shares  for the global NAND market  
(79) The Parties and their main competitors’ market shares in the  global NAND market for 
2019 are as follows:  
                                                 
67 Form CO, para. 6.93.  
68 Form CO, para. 6.94.  
69 Form CO, para. 6.96.  
70 Form CO, para. 6.97.  
 
17 Table 171 
NAND suppliers  Share (% Sales by Value)  
SK hynix  [10-20]% 
The Target Business  [10-20]% 
Parties Combined  [10-20]%  
Samsung  [30-40]% 
Kioxia  [10-20]% 
Western Digital  [10-20]% 
Micron  [10-20]% 
Others  [0-5]% 
 
(80) The Target Business is the sixth player and holds a single digit share ([5-10]%) on the 
overall NAND market. SK hynix is the fifth player with a share of [10-20]%. Aside 
from the Parties, there are at least four other NAND suppliers active on a g lobal basis 
whose NAND sales are larger than those of the Parties, namely Samsung ([30-40]%), 
Kioxia ([10-20]%), Western Digital ([10-20]%) and Micron ([10-20]%). In addition, 
there is a number of well -resourced smaller players, as well as a new entry, whi le 
competitors are expanding capacity.72 
(81) Samsung will remain the leader in this  market , with a approximate [30-40]% share 
that is almost double the Parties' combined share. Kioxia (approximately [10-20]%), 
Western Digital (approximately [10-20]%), Micron (a pproximately [10-20]%) are 
also major players fiercely competing in this segment. In all, there will be five 
suppliers with double -digit shares post -Transaction.73 
(i) Market shares for the global 3D  NAND market  
(82) The Parties and their main competitors’ marke t shares in the global 3D NAND market 
for 2019 are as follows:  
                                                 
71 Form CO, para 6.86.  
72 Form CO, paras 6.87 – 6.88, and Table 8.  
73 Form CO, para. 6.88.  
 
18 Table 274 
NAND suppliers  Share (% Sales by Value)  
SK hynix  [10-20]% 
The Target Business  [10-20]% 
Parties Combined  [20-30]% 
Samsung  [30-40]% 
Kioxia  [10-20]% 
Micron  [10-20]% 
Western Digita l [10-20]% 
YMTC  [0-5]% 
(83) Post-merger Samsung will continue to be the undisputed leader with an approximate 
[30-40]% share, followed by the merged entity (approximately [20-30]%), Kioxia 
(approximately [10-20]%), Micron (approximately [10-20]%) and Western Digital 
(approximately [10-20]%), all strong competitors with double -digit shares. YMTC has 
started making its way in this market with significant technological achievements and  
capacity expansion plans . 
(ii) Supply for NAND   
(84) Customers  usually have a varie ty of options when choosing a supplier. The results  of 
the market investigation indicate  that suppliers of NAND sell their products through 
requests for quotations and long -term agreements with their customers.75 Respondents 
to the market investigation desc ribed purchas ing NAND either on the basis of long 
term agreements or on the basis of individual orders. In the latter case, this is done after collecting quotations from various suppliers  .
76 Pricing tends to be reasonably 
similar between suppliers and inde pendent market consultant reports can be used to 
evaluate whether pricing is competitive.77 This means that suppliers need to maintain 
a competitive portfolio, both in terms of price and quality, to effectively compete in the market.  
(85) Post-transaction, there  will continue to be several players in the market, maintaining 
a high level of competition. Consistent with the Parties and their main competitors’ 
market shares, respondents to the market investigation identified Western Digital , 
Samsung and Kioxia as to p NAND suppliers.
78 They also confirm  that the l evel of 
competition in the market for 3D NAND  is high, and the market is intensely 
competitive. As a result, at  least six entities currently develop and manufacture 
                                                 
74  Form CO, para 6.91.  
75  Replies to Questionnaire, question 23.  
76  Replies to Questionnaire, question 25.  
77  Replies to Questionnaire, que stion 27.  
78  Replies to Questionnaire, questions 24 and 26.  
 
19 NAND, including Sam sung, SK hynix, Micron, Intel,  Kioxia, Western Digital, and 
YMTC. These companies invest in R&D  and manufacturing process technologies . 79 
(86) Although t he Parties are significant 3D NAND players, as they  both provide 3D 
NAND, which (in contrast to 2D NAND) accounts for the majority of NAND product 
offerings in today’s market ,80 they compete closely with Samsung, Kioxia, Western 
Digital  andMicron. This was  confirmed by the respondents to the market 
investigation.  T he Parties and the aforementioned players are globally competing , 
coveri ng  all major applications for NAND flash memory, such as smartphone /cSSDs/  
eSSDs/  others . These players  are active in all the markets where the Parties are active.  
YMTC , for its part, is active primarily in Chinese market at this moment.81  
(87) From the suppl y-side, suppliers experience pressure from (potential) new market 
entrants in the supply of 3D NAND.Moreover, as a result of the existing players and 
potential new entran ts, the supply of 3D NAND is readily available. W hen the supply 
of 3D NAND is readily available, there is a constraint imposed on suppliers which results in a reduction in pricing. YMTC, for example, is a new entra nt in the supply of 
3D NAND, its entry will increase the level of supply in the market and thus  lead to a 
reduction in pricing . Additionally, suppliers also experience pressure from the fact that 
customers multisource, as indicated below.
 82  
(iii) Demand for NAND  
(88) From the demand-side, the Transaction is not likely to provide the Parties with 
exclusive customers. It is common for customers to source from various suppliers 
which means that switching suppliers would not be difficult. Respondents to the 
market investigation confirm  that it is easy for a customer to swit ch between suppliers 
of 3D NAND83 as customers usually multisource the product from different suppliers  
and therefore, do not depend on a single supplier.84 For this reason, they are also able 
to easily increase or decrease the amount of their purchases from a given supplier.85 
(89) However, customers would not have  the ability to  credibly threaten producers of 3D 
NAND by starting to source their needs for 3D NAND in -house as the capital 
expenditure required to produce their own NAND is cost -prohibitive for customers. 
Production requires dedicated manufacturing fabs and decades of knowledge to 
maintain the pace on lithography transitions.86 
(iv) Innovation and financial capacity in the NAND market  
(90) The ability of a supplier of 3D NAND to innovate also plays a significant role in 
remaining competitive on the market for 3D NAND. 3D NAND is quantified by the 
number of layers stacked in a device. As more layers are added, the bit density 
increases. Generally, suppliers are scaling 3D NAND roughly one technology 
                                                 
79  Replies to Questionnaire, question 28.  
80  Replies to Questionnaire, question 29.  
81  Replies to Questionnaire, question 30.  
82  Replies to Questionnaire, question 36 and 36.1.  
83  See replies to q uestion 32.  
84  Replies to Questionnaire, question 33.  
85  Replies to Questionnaire, question 34.  
86  Replies to Questionnaire, question 35.  
 
20 generation every year. It is crucial for each player to quickly introduce advan ced 
technologies to gain (or retain) competitiveness. 87 
(91) The market investigation results indicate that s uppliers or potential suppliers of 3D 
NAND have a financial strength comparable to that of SK hynix and the Target 
Business . In particular, respondents to the market investigation take the view that all 
the competitors are generally of equal size to SK Hynix and the Target Business  and 
make similar CAPEX investment. The exception to this is Samsung, which is larger 
and its CAPEX greater than that of other  competitors.88 As a result, the Parties do not 
appear to have a particular advantage in terms of financial capacity.  
(92) The Transaction is viewed by the market players as a transaction that will increase the 
competition in the market.89 Moreover, market partic ipants take the view that the 
Transaction will improve competition as well as the quality and the range offering of products.
90 In fact, according to market participants, the transaction will create a 
“memory house” able to compete with Samsung.  
(v) Competi tion in the NAND market  
(93) While  the market investigation results point to an increased market share of the 
merged entity in 3D NAND post -Transaction, and while  the Transaction will lead to 
a reduction in the number of large suppliers of 3D NAND from seven to six, this does 
not raise competition concerns  for the majority of the respondents. T he merged entity 
will continue to face significant competitive constraints from the remaining players, 
such that the increase in the merged entity’s market share will not lead to the 
acquisition of market power.91  
Conclusion  
(94) In light of the above, and in particular in view of the moderate combined market share 
of the Parties as well as the important number of competitors of varying size that will remain active post -merger, the Commission considers that the Transaction does not 
give rise to serious doubts as to its compatibility with the internal market with respect 
to the possible markets for NAND.  
5.2.2. SSD 
(95) The Parties are both active in SSDs, including e SSDs and c SSDs. SK hynix has 
historically focused on c SSDs, whereas the Target Business has focused on e SSDs.  
(96) Within enterprise SSDs, the Parties ’ activities  only overlap in SSDs with PCIe and 
SATA interfaces. Neither party sells SAS SSDs. Intel […] does not itself compete in 
SAS SSDs.  
                                                 
87  Replies to Questionnaire, question 37 and 37.1.  
88  Replies to Questionnaire, question 38 and 38.1.  
89  Minutes of  a call with a customer of 22.02.2021.  
90  Minutes of a call with a customer of 18.02.2021.  
91  Replies to Questionnaire, question 39 and 39.1.  
 
21 5.2.2.1.  Notifying Party’s view  
(97) According to the Notifying Party, t he market for SSDs is highly competitive. Samsung 
is by far the largest player. Western Digital, Kioxia, Micron and Kingston are also 
major SSD competitors, while YMTC's entry/expansion92 will introduce another 
major competitor. Other emerging players include Seagate (a leading HDD 
manufacturer) and Ramaxel. SK hynix is the sixth biggest player with a market  share 
of approximately [5-10]%, with only one percentage point separating it from the 
seventh player, Kingston. Post -Transaction, the merged entity would have a market 
share of approximately [20-30]% ([10-20% acc ording to Forward Insights; [20-30]% 
according to Omdia).  
(98) The Notifying Party submits that the Parties are not close competitors i n SSD. The 
Target Business primarily focuses on enterprise SSD. Enterprise SSD represent s 
approximately […]% of the Target Business' total 2019 SSD revenues. Conversely, 
SK hynix focuses more on client SSD. Client SSD represent s approximately […]% of 
SK hy nix's total 2019 SSD revenues. Within the enterprise segment, the Parties have 
differentiated offerings, with the Target Business addressing the requirements of both OEMs and cloud customers, while SK hynix is focused predominantly on cloud 
customers, with most of its revenues coming from a single customer to which it sells 
a customiz ed offering ([…]).  
(99) The Notifying Party notes  that the SSD market is highly competitive  not only because 
of the existence of several competitors but also due to its quality as a  dynamic market, 
in which innovation plays an important part.  
(100) In light of the above, the Notifying Party takes the view that the proposed Transaction 
would not give rise to any anti -competitive concerns in the overall market for SSDs.  
The Notifying Party further submits that the same conclusion would apply to possible 
segmentations of the SSD market. 
(A) Enterprise SSDs  
(101) The Notifying Party submits that if the proposed Transaction was  assessed under the 
narrower enterprise SSDs and client SSDs segments, it woul d likewise not be 
problematic.  
(102) The proposed Transaction will not change the competitive landscape in the enterprise 
SSD space. SK hynix is only the sixth player in enterprise SSDs, with a market share 
by revenue of approximately [0-5]%, and approximately […]% of SK hynix's 
enterprise SSDs sales are derived from  […].  
(103) Post-transaction, Samsung will remain the leader wi th a share of approximately 
[30-40]% followed by the merged entity with a share of approximately [20-30]% (and 
a share increment of approximat ely [0-5]%%). The Parties' major competitors in the 
enterprise SSDs segment include, besides Samsung, Kioxia, Micron, Western Digital and S eagate. Kioxia (approximately [10-20]%), Micron (approximately [5-10]%) and 
                                                 
92  YMTC has a small market share in the NAND market and is now expanding in the SSD market. YMTC's 
entry in the NA ND segment makes it a credible and timely entrant in the SSD segment. In September 2020, 
YMTC announced the release of a SATA eSSD in collaboration with H3C Technologies. Also, YMTC recently released the PC005 and SC001 client SSD under the sub -brand ZhiTa i, which leverage YMTC's 
own 3D NAND flash memory technology. Industry analysts suggest that these products appear to have comparable performance to Samsung's client SSDs.  
 
22 Western Digital (approximately [5-10]%) a re approximately three to four times larger 
than SK hynix, while Seagate (approximately [0-5]%) has a comparable position to 
SK hynix.  
(104) According to the Notifying Party, yperscale customer s have developed and produced 
their own enterprise SSDs for in-house use in their data centers. Huawei, Google and Amazon also manufacture their own enterprise SSDs. Customers that already produce 
their own enterprise SSDs can threaten to shift more of their enterprise SSD 
consumption to their own internal production, and c ustomers that do not already 
produce their own enterprise SSDs can threaten to do so.  
Enterprise SSD segmentation by interface  
(105) According to the Notifying party, even assuming the enterprise SSD segment were to 
be further divided by interface , no competition concerns would arise in the resulting 
subsegments.  
(B) SAS Enterprise SSDs  
(106) The Notifying Party submits that neither Party sells SAS enterprise SSDs ("SAS 
eSSDs").  
SATA Enterprise SSDs  
(107) According to the Notifying P arty, as  regards  SATA enterprise SSDs ("SATA eSSDs"), 
the merged entity would have a combined market  share of approximately [30-40]%. 
SK hynix has a market  share of approximately [0-5]%, thus the proposed Transaction 
would result in a de minimis market share increment. […].  
(108) The Notifying Party submit s that the Target Business ’s market share  has lost [10-20]  
percentage points between 2015 and 2019 (from approximately [40-50]% in 2015 to 
approximately [30-40]% in 2019) and its sales have also declined significantly in 
absolute terms from USD […] in 2017 to USD […] in 2019 given its focus on PCIe. 
In view of the fact that in recent years PCIe SSDs have been increasingly 
outperforming and replacing SATA SSDs for enterprise applications, […]. Samsung 
(approximately [30-40]%) would have a comparable position to the merged entity, 
followed by Micron (approximately [20-30]%). Further, a number of smaller 
competitors including, Kioxia (approximately [0-5]%), Western Digital (approximately [0-5]%) and others will continue to compete in this market . 
(C) PCIe Enterpris e SSDs  
(109) In the possible market for PCIe enterprise SSDs ("PCIe eSSDs"), the Parties ’ 
combined market share is approximately [40-50]% ( Target Business approximately 
[30-40]% and SK hynix approximately [5-10]%). West ern Digital (approximately 
[5-10]%)
93 and Ki oxia (approximately [5-10]%) have comparable positions to SK 
                                                 
93  In August 2020, Western Digital announced that its revenues from sales of enterpr ise SSDs "more than 
doubled in revenue" compared to the previous year and in April 2020, Western Digital confirmed that its 
latest PCIe -based SSDs "have completed more than 20 qualifications with well over 100 qualifications in 
progress at multiple cloud a nd OEM customers worldwide". See 
https://www.westerndigital.com/company/newsroom/press -releases/2020/2020- 08-05-western -digital-
reports -fourth- quarter -and-fiscal -year-2020- financial -results; see 
 
23 hynix, while Micron (approximately [0-5]%) is rapidly catching up (between 2017 and 
2019 Micron more than doubled its share). The factors discussed above illustrating the 
highly competitive nature of the overall segment for enterprise SSDs likewise apply 
in the narrower markets  of SATA eSSDs and PCIe eSSDs.  
(110) The Notifying Party submits that the  proposed Transaction will not result in any 
competition concerns in the areas of enterprise SSDs. In the overall enterprise SSD 
market , SK hynix is the sixth player with a revenue share of approximately [0-5]%, 
and behind Samsung, Kioxia, Micron, Western Digital, as well as the Target Business, and only half a percentage point ahead of Seagate. Cloud customers , in particular, 
exercise significant negotiating leverage due to the large size of their purchases and 
demonstrated ability to manufacture their own SSDs.  
(111) The Notifying Party submits that this conclusion would be similar  on an SSD interface 
basis. The Pa rties are not active in SAS, and SK hynix only has a market share of 
approximately [0-5]% in SATA. In PCIe, […]% of SK hynix's 2019 global PCIe eSSD 
sales were to  […]. 
(D) Client SSDs  
(112) The Notifying Party considers that the  segment for client SSDs is highly com petitive. 
Numerous companies compete in the client SSD segment, in which the Parties' 
combined share is approximately [10-20]%. Samsung will continue to be the leading 
supplier with a market share of approximately [30-40]%, while W estern Digital 
(approxima tely [10-20]%), Kioxia (approximately [10-20]%), Kingston 
(approximately [5-10]%) and Micron (approximately [5-10]%) are all strong and well -
established global players, who will exert competitive pressure on the merged entity. 
(113) First, a number of emerging a nd expanding players, including Seagate and Ramaxel, 
also participate in the segment. Seagate's history as a major hard drive manufacturer 
gives it an edge as it expands its SSD business, as it has established relationships with OEMs, which are the major purchasers of client SSDs.  
(114) Second, YMTC's  entry announced in 2020, provides additional evidence of the highly 
competitive nature of this segment. Industry analysts suggest that YMTC’s recently 
released products appear to have comparable performance to Sams ung's client SSDs.  
(115) Third, some potential large clients are currently covering their demand for client SSDs 
in-house. For example , Apple captures approximately [0-5]% of the total demand.  
5.2.2.2. The Commission’s assessment  
(116) The market investigation confirmed the No tifying Party’s claims.. Even though the 
Parties are considered significant market players in the SSD market, the Commission considers that the Transaction is not likely to give rise to anti -competitive effects for 
the reasons mentioned below. 
                                                 
https://www.westerndigital.com/company/newsroom/press -releases/2020/2020- 04-30-western -digital-
reports -fiscal -third-quarter -2020- financial -results.  
 
24 (i) Market share s for the global SSD  market  
(117) The Parties ’ and their main competitors’ market shares in the global SSD market for 
2019 are as follows:  
Table 394 
SSD suppliers  Share (% Sales by Value)  
SK hynix  [5-10]% 
The Target Business  [10-20]%  
Parties Combined  [10-20]%  
Samsung  [30-40]% 
Western Digital  [10-20]%  
Kioxia  [10-20]%  
Micron  [5-10]% 
Kingston  [0-5]% 
Apple  [0-5]% 
Seagate  [0-5]% 
Ramaxel  [0-5]% 
Others  [5-10]% 
 
(118) Post-transaction Samsung will remain the leading SSD supplier, with a share of 
approximately [30-40]%, far exceeding the combined share of the  merged entity. 
Western Digital (approximately [10-20]%), Kioxia (approximately [10-20]%), 
Micron (approximately [5-10]%) are also suppliers in SSDs with shares above 5%, 
and a number of smalle r competitors such as Kingston  ([0-5]%), Seagate  ([0-5]%) and 
Ramaxel ([0-5]%) have also gained share in recent years. Kingston has increased sales 
significantly in 2019, capturing now approximately [0-5]% of the SSD supply. Seagate 
is a new entrant  in the SSD market but  a leading manufacturer of HDD.95 
                                                 
94 Form CO, para 6.104.  
95 Form CO, para. 6.105.  
 
25 (i) Market shares for the global Enterprise SSD (eSSD) market  
(119) The Parties ’ and their main competitors’ market shares in the global eSSD market for 
2019 are as follows:  
Table 496 
eSSD suppliers  Share (% Sales by Value)  
SK hynix  [0-5]% 
The Target Business  [20-30]% 
Parties Combined  [20-30]%  
Samsung  [30-40]% 
Kioxia  [10-20]% 
Micron  [5-10]% 
Western Digital  [5-10]% 
Kingston  [0-5]% 
Seagate  [0-5]% 
Kingston  [0-5]% 
Others  [5-10]% 
 
(120) Post-transaction, Samsung will remain the leader w ith a share of approximately 
[30-40]% followed by the merged entity with a share of approximately [20-30]% (and 
a share increment of approximately [0-5]%). The Parties' major competitors in the 
enterprise SSDs segment include, besides Samsung, Kioxia, Micron, Western Digital , 
Kingston  and S eagate. Kioxia (approximately [10-20]%), Micron (approximately 
[5-10]%) and Western Di gital (approximately [5-10]%) are approximately three to 
four times larger than SK hynix, while Seagate (approximately [0-5]%) has a 
comparable position to SK hynix. It is noteworthy that SK hynix relies on […] for 
most of its sales.97 
                                                 
96 Form CO, para 6.119.  
97 Form CO , para. 6.120.  
 
26 (i)Market shares for the global SATA  eSSD market . 
(121) The Parties ’ and their main competitors’ market shares in the global SATA eSSD 
market for 2019 are as foll ows:  
Table 598 
SATA eSSD suppliers  Share (% Sales by Value)  
SK hynix  [0-5]% 
The Target Business  [30-40]% 
Parties Combined  [30-40]%  
Samsung  [30-40]% 
Micron  [20-30]% 
Kioxia  [0-5]% 
Western Digital  [0-5]% 
Seagate  [0-5]% 
Kingston  [0-5]% 
Others  [5-10]% 
 
(122) Samsung (approximately [30-40]%) would have a comparable position to the merged 
entity, foll owed by Micron (approximately [20-30]%). Further, a number of smaller 
competitors including, Kioxia (approximately [0-5]%), Western Digital 
(approximately [0-5]%) and others will continue to compete in this subsegment. 
(123) The Target Business has lost [10-20] percentage points in share between 2015 and 
2019 (from  approximately [40-50]% in 2015 to approximately [30-40]% in 2019) and 
its sales have also declined signifi cantly in absolute terms from USD […] in 2017 to 
USD […] in 2019 given its focus on PCIe (as described below). In view of the fact 
that in recent years PCIe SSDs have been increasingly outperforming and replacing 
SATA SSDs for enterprise applications, […].  
                                                 
98 Form CO, para. 6.134.  
 
27 (i)Market shares for the global PCIe eSSD market  
(124) The Parties ’ and their main competitors’ market shares in the global PCIe eSSD 
market for 2019 are as follows:  
Table 699 
PCIe eSSD suppliers  Share (% Sales by Value)  
SK hynix  [5-10]% 
The Target Business  [30-40]% 
Parties Combined  [40-50]% 
Samsung  [30-40]% 
Kioxia  [5-10]% 
Western Digital  [5-10]% 
Micron  [0-5]% 
Silicon Motion  [0-5]% 
Seagate  [0-5]% 
Others  [5-10]% 
 
(125) Samsung w ill be the largest competitor after the merged entity (approximate ly 
[30-40]%). Western Digital (approximately [5-10]%) and Kioxia (approximately 
[5-10]%) have comparable positions to SK hyni x, while Micron (approximately 
[0-5]%) is rapidly catching up (between 2017 and 2019 Micron more than doubled its 
share). 
(126) Despite the Parties’ comb ined market shares in the PCIe eSSD market, in light of the 
assessment below and in particular of the indications provided by the results of the 
market investigation that a sufficient number of alternative suppliers will remain 
active in PCIe eSSDs, the Commission considers that the Transaction does not give 
rise to serious doubts as to its compatibility with the internal market with respect to the possible market for PCIe eSSDs.  
                                                 
99 Form CO, para. 6.137.  
 
28 (i)Market shares for the global Client SSD (cSSD) market  
(127) The Parties ’ and thei r main competitors’ market shares in the global cSSD market for 
2019 are as follows:  
Table 7100 
PCIe eSSD suppliers  Share (% Sales by Value)  
SK hynix  [5-10]% 
The Target Business  [5-10]% 
Parties Combined  [10-20]%  
Samsung  [30-40]% 
Western Digital  [10-20]% 
Kioxia  [10-20]%  
Kingston  [5-10]% 
Micron  [5-10]% 
Apple  [0-5]% 
Ramaxel  [0-5]% 
Seagate  [0-5]% 
Others  [5-10]% 
 
(128) Post-transaction the merged entity will have a share of approximately [10-20]%, 
which means that the market for cSSDs is not affected. Sa msung will continue to be 
the leading s upplier with an approximately [30-40]% share, while W estern Digital 
(approximately [10-20]%), Kioxia (approximately [10-20]%), Kingston 
(approximately [5-10]%) and Micron (approximately [5-10]%) are all strong and wel l-
established global players, who will exert competitive pressure on the merged entity. 
Assessment on the global market for SSDs  
(129) The Commission’s assessment applies to the global SSD market as well as all its potential narrower markets. 
(130) As regards the global SSD market, according to the Horizontal Merger Guidelines, in 
a concentration where the market share of the undertakings concerned is low , the 
concentration is presumed to be compatible with the internal market. An indication to 
this effect ex ists, in particular, when the market share of the undertakings does not 
                                                 
100 Form CO, para. 6.145.  
 
29 exceed 25 % either in the common market or in a substantial part of it, the 
concentration.101 The above apply to the global SSD market , where the combined 
market share of the undertakings concerne d is ([10-20]%). First, the market 
investigation results show that the overall SSD market is highly competitive. 
According to the majority of respondents, competition is equally high for the eSSDs 
market further divided into the SATA eSSDs and PCIe eSSDs m arkets.102 The market 
for cSSDs is not considered to be an affected market since the Parties’ combined market share is less than 20%.  
(131) The high level of competition is reflected by the existence of other players that 
compete closely with the Parties in terms of product portfolio similarity, performance, quality and price in the overall market for SSDs and its potential narrower markets 
(SATA eSSDs, PCIe eSSDs).
103 Samsung will remain the leading SSD supplier, with 
several other players in the market (i.e. Western Digital, Kioxia, Micron) that are also established suppliers in SSD occupying considerable market shares. The only market 
in which Samsung will be the second biggest player, is the market for PCIe eSSDs. A 
number of smaller competitors such as Kingston, Silicon Motion, Seagate and 
Ramaxel have also gained share in recent years.  In addition, YMTC's recent entry 
provides additional evidence of the existence of significant competitive constraints in the SSD segment.  
(ii) Demand for SSDs  
(132) Second, from the de mand -side, the market investigation participants take the view that 
it is easy for a customer to switch between suppliers of SSDs, c SSDs and eSSD 
(including the markets for SATA eSSDs, PCIe eSSDs). Customers typically multi -
source and compare the price offered by each supplier.
104 Customers are also able to 
easily increase or decrease the amount of their purchases for the above products from 
a given supplier.105  
(133) In addition to multi -sourcing, vertical integration is not something that can affect 
demand in the SSD market.  In-house sourcing of SSDs is possible for customers as 
SSDs can be produced even by suppliers  that do not make their own NAND, since 
they can procure NAND separately from existing suppliers on the market.106 For the 
eSSD segment in particular, Google, Amazon and Huawei manufacture their own 
eeSSDs. Microsoft is already developing eeSSDs by procuring NAND and working 
with ODMs (e.g., Quanta, Wistron), to develop solutions for its own data centres. The 
ability of customers to successfully produce their own eSSDs gives them leverage in 
negotiating with eeSSD suppliers. This means that customers may resort in producing 
their own eSSDs if that proves to be more cost -efficient than procuring it from 
                                                 
101 See para. 18 of the Horizontal Merger Guidelines, Concentrations which, by reason of the limited market 
share of the undertakings concerned, are not liable to impede effective competition may be presumed to be 
compatible with the common market. Without pre judice to Articles 81 and 82 of the Treaty, an indication 
to this effect exists, in particular,  
102  Replies to Questionnaire, questions 46 and 46.1 – 46.4.  
103  Replies to Questionnaire, questions 48 and 49.  
104  Replies to Questionnaire, questions 45 and 57.  
105  Replies to Questionnaire, question 58.  
106  Replies to Questionnaire, question 59.  
 
30 suppliers. As the vertical integration continues, they are also less likely to depend on 
suppliers in the future.. 
(iii) Supply for SSDs  
(134) Third, from the supply -side, the market investigation indicate d that current suppliers 
experience pressure from (potential) new market entrants in the markets of SSDs and 
in the markets of all its possible markets .107 Suppliers sell in a variety of different 
ways, including responding to requests for quotations, long -term agreements and sales 
through distributors and retailers.108 The ability to innovate plays an important role for 
the suppliers who want to remain competitive in the market for SSDs, including all its potential segmentations. The respondents to the market investigation confirm  that t he 
SSD market is dynamic and characterized by significant leapfrog innovation. 
Compe titors seek to differentiate their offerings through the development and release 
of new products and technologies in this space. This rapid pace of technological innovation in SSD s is driving significant growth in demand, which incentivizes all 
competitors  to compete aggressively to capture a larger share of the growing market . 
It is, therefore,  important for suppliers to keep up with the most recent changes in 
interface and performance. Competition in the SSD market  is further intensified by 
the fact that,  similarly to NAND, SSD is a rapidly growing market .
109 
(135) Fourth, contracts in the market for SSDs and of all its sub- markets are typically 
negotiated bilaterally. Suppliers usually provide a production description and sample 
products to the customer. Followin g customer product qualification, the supplier and 
the customer will extensively negotiate the supply agreement. Enterprise SSD 
customers typically qualify more than one supplier and multi -source not only for 
security of supply purposes but also to obtain a stronger bargaining leverage.110 
(iv) Competition in the SSD market  
(136) Furthermore, the increased market power of the merged entity is unlikely to lead to 
competition concerns. First, the Parties will still have to live up to the pace of a very 
dynamic market . The new requirements, as well as the new entrants that appear in the 
market, will result in the market maintaining its competitiveness. Second, Samsung 
will still hold the largest market share and will continue to be the market leader. The 
transaction wi ll create a strong competitor with a portfolio consisting of different types 
of memory that will be able to challenge Samsung and thus, increase competition in 
the market. Samsung is a powerful “memory house” able to supply different types of 
memory to different customers and the merged entity is expected to be able to do the 
same post -Transaction.  
(137) In sum, the market investigation results confirm that the increase in market share 
brought about by the Transaction will not lead to competition concerns . The in crease 
of the merged entity’s  market share will be outweighed by the fact that the SSD market 
is highly dynamic , with the Parties facing significant competitive constraints from 
established suppliers .  In addition, post -Transaction, the merged entity will remain  
smaller than Samsung , the market leader . Certain  market participant s even took the 
                                                 
107  Replies to Questionnaire, questions 60 and 60.1 – 60.4.  
108  Replies to Questionnaire, question 44 and 44.1.  
109  Replies to Questionnaire, question 61.  
110 Replies to Questio nnaire, question 41.  
 
31 view that the acquisition of Intel’s SSD business by SK hynix will enable the merger 
entity  to better compete with Samsung. This is because the Parties will form another 
supplier with both SSD and DRAM offerings, improving the overall competition in 
the market .  becoming a viable competitor to an otherwise dominant player, 
Samsung.111 
Conclusion  
(138) In light of the above, and in particular in view of the moderate combined m arket share 
of the Parties as well as the important number of competitors of varying size that will 
remain active post -merger, the Commission considers that the Transaction does not 
give rise to serious doubts as to its compatibility with the internal market with respect 
to the possible markets for SSDs and all possible narrower markets. 
5.3. Horizontal coordinated effects  
(139) The Commission has investigated and assessed whether the Transaction is likely to 
give rise to a significant impediment to effective competit ion as a result of coordinated 
effects  in the markets for (i) 3D NAND112 and (ii) SSDs and the possible narrower 
markets therein. 
5.3.1. The Notifying Party’s view  
(140) The Notifying Party submits that there is no plausible basis to conclude that the Transaction could l ead to a significant impediment of effective competition stemming 
from coordinated effects.
113 
5.3.1.1. Ability to reach terms of coordination 
(A) NAND/3D NAND  
(141) First, t he Notifying Party explains that the Transaction does not lead to a material 
increase in concentration as the NAND/3D NAND market is already fragmented, SK 
hynix and the Target Business are only number 5 and 6 players, and their combined 
market share is very limited both in NAND and 3D NAND.  
(142) Second, NAND/3D NAND is a highly competitive segment under rapid growth where demand and supply conditions cannot be characterized as leading to a stable economic 
environment. Flash memory storage has become a key component in smartphones and, 
as a result, NAND/3D NAND demand has grown -  and continues to grow - rapidly,  
driven by the growth in the use of smartphones and of their average capacity. Other 
consumer products, such as tablets and cameras, along with industrial equipment and 
sensors, automotive systems and medical devices, also rely upon flash memory. 
Industry NAND/3D NAND supply has continued to grow alongside this rapidly 
expanding demand and is projected to continue to do so.  
(143) Third, market conditions in NAND/3D NAND are not stable. Capacity and production are expanding rapidly to keep up with increased demand, while cost and prices are 
                                                 
111  Minutes from a call with a customer, customer of 22.02.2021.  
112  For completeness, in this section the Commission assesses the overall market for NAND as well, despite it 
not being technically affected.  
113  The Notifying Party sets ou t its arguments regarding coordinated effects in paragraphs 6.153 – 6.230 of the 
Form CO.  
 
32 falling. The Notifying Party considers that t he rapidly increasing demand means that 
it is unlikely for NAND/3D NAND competitors to reach a common understanding on 
the terms of a potential coordination.  
(144) Fourth, the Notifying Pa rty submits that asymmetric positions and diverging priorities 
will remain post -transaction. Samsung will remain the largest supplier with a market 
share (approx. [30-40]% in  NAND and [30 -40]% in 3D NAND) significantly higher 
than the remaining p layers. Ki oxia (approximately [10-20]% in both NAND and 3D 
NAND), W estern Digital (approximately [10-20]% in both NAND and 3D NA ND) 
and Micron (approximately [10-20]% in NAND and in [10-20]% 3D NAND) are also 
major suppliers  and their market shares have fluctuated over time, reflecting the fierce 
competition between all players.  
(145)  Fifth, the Notifying Party observes that there are recent entry and expansion efforts in 
NAND/3D NAND, in particular by YMTC, which is being reported to be increasing its capacity.  
(146) Sixth, the Notifying Party explains that NAND (and 3D NAND in particular) is a 
technologically evolving hi -tech component making coordination difficult and thus 
highly unlikely. NAND differentiation results from continuous R&D, which is tied to 
capacity, cost, laye r count and bit density. These factors affect the 3D NAND 
performance, durability, reliability and price. 
(147) Last, the Notifying Party notes that sales of NAND/3D NAND are lumpy with 
suppliers typically concluding framework sales contracts with customers. Cus tomers 
then make purchase undertakings, where volumes and prices are negotiated within 
such framework sales contracts. Opportunities for NAND/3D NAND suppliers to 
compete for sales contracts are relatively infrequent, while purchase undertakings are 
typica lly large, which makes coordination unlikely.  
(B) SSD 
(148) First, the Notifying Party considers that, in light of the number of players and the 
position of SK hynix in SSD
114 and the possible markets  thereof, the Transaction does 
not lead to a material increase in co ncentration.  
(149) Second, the Notifying Party submits that SSD is  complex and highly competitive with  
rapid growth where demand and supply conditions cannot be characterized as stable. 
Demand for enterprise SSD in recent years has been driven by expansion of data center 
servers in an increasingly connected cloud environment. New and/or improved 
enterprise SSD products tend to be released in a cycle of approximately 18 months.  
(150) Third, the Notifying Party observes that, post -Transaction there will remain many 
strong competitors with asymmetric and fluctuating shares, different costs and 
capacity, and diverging priorities . In addition, smaller but vigorous competitors and 
dynamic new entrants contribute to share asymmetry. 
(151) Fourth, the Notifying Party considers that the asymmetric nature of upstream and 
downstream vertical integration in the SSD industry results in different production costs and would make a hypothetical coordination even more difficult. SSD suppliers 
                                                 
114  For the purposes of this section the term  SSD  will be used to also refer to eSSDs, SATA sSSDs, and PCIe 
eSSDs.  
 
33 have adopted different make/buy strategies regardi ng the key SSD components, i.e, 
NAND, controllers and firmware, including in-house production, outsourcing, or a 
combination of the two.  
(152) Fifth, the Notifying Party notes that SSDs are a heterogeneous product and differ in 
terms of characteristics such as performance, endurance and reliability and, to a lesser extent, other features (such as power consumption). SSDs are customized to meet 
customer specific performance and endurance requirements and undergo customer 
qualification processes to ensure they mee t the specifications of the customer's system 
or device. 
(153) Sixth, the Notifying Party submits that constant innovation in SSD would undermine coordination as competitors constantly attempt to differentiate their offerings through the development and release of new products and technologies in this space. 
(154) Last, the Notifying Party observes that sales of SSDs are lumpy with suppliers 
typically concluding framework sales contracts with customers. Customers then make 
purchase undertakings, where volumes and price s are negotiated within such 
framework sales contracts. Opportunities for SSDs suppliers to compete for sales 
contracts are relatively infrequent, while purchase undertakings are typically large, 
which makes coordination unlikely.  
5.3.1.2. Sustainability of coordination  
(A) Ability to monitor deviations   
(155) The Notifying Party submits that for both NAND/3D NAND and SSDs  the market is 
not transparent. The supply contracts in NAND and SSD are typically based on non-transparent, confidential bilateral negotiations between cus tomers and suppliers. As a 
result, NAND and SSD prices and other commercial terms are highly opaque. There 
is no public price reporting on individual contracts. Market intelligence firms report 
only on historic aggregated data that they receive by each supplier, and they also have no way of verifying the accuracy of each supplier's transmitted data.  
(156) Monitoring (and enforcing) a hypothetical agreement to slow down on NAND and 
SSD R&D/innovations (e.g., delaying the introduction of 100+ layer NAND) would 
be equally difficult, as there is no transparency whatsoever regarding R&D activities 
of competitors, and suppliers can only detect deviations with a delay (i.e., when a 
"cheating" supplier launches a new product). It would take time for other suppliers to 
catch up and punish the "cheater", while at the same they would be incurring 
significant losses from falling behind technologically vis -à-vis the cheater  
(B) Ability to establish a credible deterrent mechanism  
(157) The Notifying Party submits that the lack of market transparency in NAND and SSD 
would not allow for a credible deterrent mechanism to be established. In addition to 
prices being opaque, customers can create strong incentives for aggressive price competition. In order to remain competitive, NAND suppliers m ust continue to 
innovate and scale the number of stacks - generally suppliers are scaling 3D NAND 
roughly by one technology generation every year. In view of the short technological cycle of the NAND and SSD products, the gains from deviation from a hypothetical 
coordination would be significant due to the expected profits made with next 
generation products. 
 
34 (C) Reaction of outsiders  
(158) The Notifying Party considers that the presence of a significant number of competitors 
with asymmetric and fluctuating capacity a nd market positions makes coordination 
very difficult. Both markets  are also characterized by new entry and expansion, which 
would destabilize any coordination attempt. Customers can create strong incentives for aggressive price competition while, in parti cular with regard to eSSDs, hyperscale 
customers have developed and produced their own enterprise SSDs for in-house use in their data centres, which gives them an important leverage not only in negotiating 
with enterprise SSD suppliers but also in neutrali zing any coordination attempt. 
5.3.1.3. SK hynix’s shareholding in Kioxia  
(159) The Notifying Party submits that SK hynix' existing passive interest in Kioxia has no 
impact on the risk of potential coordinated effects from the Transaction. 
(160) First,  the Notifying Party note s that  this interest exists pre -merger and the Transaction 
does not modify the competitive dynamics in the NAND and SSD markets . The 
Transaction does not lead to any material increase in concentration; it brings together two companies with largely compleme ntary product portfolios, overlapping only in a 
few markets  where they are not close competitors and with moderate combined market 
shares. There is no indication of past coordination or softened competition in NAND 
or SSD  
(161) Second, to the extent that structural links may increase the risk of coordinated effects, 
the Notifying Party argues that this is typically the case where they involve or lead to 
the exchange of confidential or competitively sensitive information. SK hynix' interest in Kioxia  […]. Therefore, this link does not in any way increase the level of 
transparency in the industry. The Transaction does not in any way change this reality. 
5.3.2. The Commission’s assessment  
(162) The Commission considers that the Transaction will not create conditions that will enable or sustain coordination.  
5.3.2.1. Ability to reach terms of coordination 
(163) The Commission considers that suppliers of NAND and SSD will not be able to reach 
terms of coordination as a result of the Transaction. 
(A) NAND  
(164) Overall, the market investigation confirmed tha t the risk of coordination will remain 
low post -Transaction.
115 NAND/3D NAND is expected to remain competitive because 
there will remain six suppliers competing for business. Currently NAND suppliers do 
not coordinate their behaviour and the continued streng th of competition between 
suppliers post -Transaction means that the Transaction will not in any way impact this 
lack of coordination.116 
                                                 
115  Replies to Questionnaire Q1, question 73.  
116  Replies to Questionnaire Q1, question 73.1.  
 
35 (165) The Commission, considers that  the Transaction is unlikely to enable suppliers of 
NAND to reach terms of coordination.  
(166) First, the Transaction will not significantly increase concentration on the market as 
there will remain several NAND/3D NAND suppliers on the market. In NAND, 
market leader Samsung, Kioxia, Western Digital, and Micron, along with Windbond 
and Powerchip will remain on the market. Similarly, in 3D NAND Samsung, Kioxia, Micron, Western Digital and YMTC will remain active.  
(167) Second, the Parties are players with low market shares, which means that the 
Transaction will not significantly increase the degree of concent ration of the market . 
In NAND, the Target Business had [5-10]% and SK hynix [10-20]% in 2019. Samsung 
is the market leader with [30-40]%, followed by Kioxia ([10-20]%) and Western 
Digital ([10-20]%). Similarly, in 3D NAND, SK hynix and the Target Business are 
the 5
th and 6th players, preceded by Samsung ([30-40]%), Kioxia ([10-20]%), Micron 
([10-20]%) and Western Digital ([10-20]%). Therefore, the merged entity’s share will 
remain much lower than the one of the market leader, whereas there will remain a 
number of other significant players with market shares above 10% (i.e. larger than the 
increment brought by the Transaction). 
(168) Third, the combination of the Parties’ activities will not enable coordination on the 
market as the Parties are not particularly clos e competitors in NAND, as explained 
above in Section 5.2. They serve to a great extent different customers/applications. More specifically, […]% of SK hynix's NAND revenues are derived from NAND 
flash memory mobi le phone applications, an area where the Target Business is not 
active.  […].  
(169) Fourth, the NAND/3D NAND market is characterised by a customer-led need for 
significant and constant innovation and there is no evidence showing that this need 
would be affected by the Transaction. In order to remain competitive, NAND suppliers 
must continue to innovate and scale the number of stacks. In particular, 3D NAND is 
quantified by the number of bits per cell and the number of layers stacked in a device. 
Generally, supplie rs are scaling 3D NAND roughly by one technology generation 
every year. It is crucial for each player to quickly introduce advanced technologies to 
gain or maintain competitiveness. Technology innovation in NAND drives down the 
production cost in every generation of products. If a company fails to roll -out a next 
generation product line with reduced production cost, it would face significant losses 
that could drive it out of the market.  
(170) In the course of the market investigation, customers and competitors thus confirmed 
that innovation in NAND/3D NAND products is important for suppliers to gain an 
advantage over their competitors.
117 All competitors compete to develop the next 
generation of NAND flash memory, and to release competitive new generation products i n a timely manner. Given the highly competitive nature of the NAND 
market, such innovations can make a supplier’s products more competitive than 
products offered by rivals.
118 Innovations are necessary to increase performance and 
reduce cost as well as to ov erall increase efficiency of the manufacturing process. Lack 
                                                 
117  Replies to Questionnaire Q1, question 68.  
118  Replies to Questionnaire Q1, question 68.1.  
 
36 of innovation will inevitably lead to a competitor lagging behind and therefore losing 
position in the market.119 
(171) Fifth, the Transaction will not lead to a change in the way contracts are negotiate d 
between suppliers and customers. Typically, suppliers conclude framework sales contracts and customers then make purchase undertakings, where volumes and prices are negotiated, within such framework sales contracts. As sales are lumpy and 
infrequent, eac h sale opportunity would be valuable for each competitor thus 
minimising the incentive to adhere to a coordinated behaviour. 
(172) In the course of the market investigation, both customers and competitors confirmed 
that NAND/3D NAND, especially those aimed for h igh-end applications such eSSD s, 
need to be adapted on the basis of customer requirements or specifications.
120 
Respondents also confirmed that supply conditions are overall not stable due to 
volatile demand and supply.121 It is noted that NAND demand has been fluctuating but 
is continuously expanding and is projected to continue to expand in future. All major 
NAND suppliers have introduced additional production facilities to catch up with this growing market demand and are expected to continuously increase the  production 
capacity to meet future market growth.
122 
(173) Regarding prices, customers explain that NAND/3D NAND prices are not 
transparent.123 The same applies for volumes sold.124 Prices are negotiated bilaterally 
and competitors do not have the ability to monitor prices.125 Many NAND suppliers 
also use significant portions of their NAND internally, further obfuscating price and supply/demand.
126 Suppliers confirmed that they are not in a position to know when 
competitors plan price increases.127 Some suppliers explained that they carry out their 
own price analysis on the basis of customers pushing back when they consider a price 
is not sufficiently competitive.128 Market participants further explain that historic 
prices and volumes are available via industry analytical publ ications/reports such as 
TrendForce, Forward Insights and Gartner.129 
(174) Similarly, suppliers submit that they are not in a position to know how much spare 
production capacity is held by their competitors or if they plan to expand capacity.130 
General estimates b ased on publically available information are possible but the level 
of accuracy is not high.131 
(175) Sixth, the NAND/3D NAND market is characterised by differentiation in product 
characteristics. NAND from different suppliers have different attributes depending on 
the design choices each NAND supplier had made. For example, differences in the 
                                                 
119  Replies to Questionnaire Q1, question 68.1.  
120  Replies to Questionnaire Q1, question 66.  
121  Replies to Questionnaire Q1,  question 67.  
122  Replies to Questionnaire Q1, question 67.1.  
123  Replies to Questionnaire Q1, question 69.  
124  Replies to Questionnaire Q1, question 71.  
125  Replies to Questionnaire Q1, question 69.1.  
126  Replies to Questionnaire Q1, question 69.1.  
127  Replies to Questionnaire Q1, question 70.  
128  Ibid. 
129  Replies to Questionnaire Q1, question 71.1.  
130  Replies to Questionnaire Q1, question 72.  
131  Replies to Questionnaire Q1, question 72.1.  
 
37 number of layers in a NAND chip lead to performance differences across different 
NAND products, which makes them suitable for different end uses. Similarly, 
differences in the number of bits per cell can lead to differences in durability and 
reliability across different NAND products, which further differentiates the end uses 
for which they are suitable. The differences in layer count and bit density also lead to 
material cost  differences across different NAND products, which are further 
exacerbated by the differences in scale among the different suppliers. The Transaction could not result in harmonising suppliers’ design and R&D planning, therefore 
causing NAND to become a more homogeneous product.  
(176) Seventh, NAND/3D NAND players have asymmetric positions with fluctuating 
market shares pre -Transaction. Samsung is the leader with a share that is almost 
double the Parties' combined share, and more than double the individual shares  of the 
other competitors, resulting in a high level of share asymmetry in NAND/3D NAND. 
Kioxia, Western Digital and Micron are also important players in this market  and their 
market shares have fluctuated over time. Their capacity expansion plans and 
participation in the innovation race demonstrate their incentive and efforts to expand 
sales and increase shares. The recent entry by YMTC, backed up by large capacity investments, will likely lead to an increase of the competitive dynamics in place. 
(B) SSD 
(177) The Commission considers that  the Transaction is unlikely to enable suppliers of SSD 
to reach terms of coordination 
(178) First, the Transaction will only lead to a small increase in concentration in light of SK 
hynix’s low market share  in SSDs ( [5-10]%), eSSDs ([0-5]%), SATA eSSDs ([0-
5]%), and PCIe eSSDs ([5-10]%)
132 and the number of remaining players in each 
possible market  segmentation.  
(179) In the overall SSDs market, there wil l remain at least ten  players including Samsung, 
Kioxia, Intel, Micron, and Western Digital . In eSSDs, there will remain at least six  
players including Samsung, Micron, Western Digital and Kioxia. In SATA eSSDs, 
there will remain at least six players including Samsung and Micron. In PCIe eSSDs, 
there will remain at least seven  players including Samsung, Micron, Western Digital 
and Kioxia.  
(180) Second, the supply and demand conditions will not be affected by the Transaction. 
Similarly to NAND, t he SSD market and the possible market segmentations is 
characterised by rapid growth and increasing demand wit hout stable market 
conditions. Demand for eSSD in particular in recent years has been driven by 
expansion of data centre servers in an increasingly connected cloud environment. New 
and/or improved eSSD products tend to be released in a cycle of approximate ly 18 
months. Industry supply has continued to grow alongside this rapidly expanding 
market demand. 
(181) Third, SSD players have asymmetric positions with fluctuating market shares pre -
Transaction. There is no evidence pointing towards a change that the Transac tion will 
bring about that will lead to more symmetry or stable shares.  
                                                 
132  The Target’s respective market shares are: [10 -20]% in SSDs, [20- 30]% i n eSSDs, [30- 40]% in SATA 
SSDs, and [30- 40]% in PCIe eSSDs.  
 
38 (182) In the overall SSDs  market , Samsung will remain the leading SSD supplier post -
Transaction, with a share of approximately [30-40]%. The Parties have a co mbined 
share of approximately [20-30]% (Target Business at approximately [10-20]% and SK 
hynix at approxi mately [5 -10]%). The shares of other major competitors are less than 
half of Samsung's share, i.e., Wes tern Digital at approximately [10-20]%, Kioxia at 
approximately [10-20]%, and M icron at approximately [5-10]%.  
(183) The market share asymmetry is also observed in the SSD possible market 
segmentations:  
(a) In eSSD, Samsung will remain the leader with a share of approximately [30-
40]% followed by the merged entity with a share of approximately [20-30]% 
(and a share increment of approximately [0-5]%), Kioxia (approxi mately [10-
20]%), Micron (approximately [5-10]%), Western Digital (approximately [5-
10]%) and Seagate (approximately [0-5]%).  
(b) In SATA eSSD, the merged entity would have a comparable posit ion to 
Samsung (approximately [30-40]%), foll owed by Micron (approximately [20-
30]%), while a number of smaller competitors including, Kioxia 
(approximately [0-5]%), Western Digital (approximately [0-5]%) and others 
will continue to compete in this po ssible market . 
(c) In PCIe eSSD, Samsung would be the largest competitor after the merged 
entity (approximately [30-40]%). Western Digital (approximately [5-10]%) 
and Kioxia (approximately [5-10]%) follow, while Micron (approximately [0-
5]%) is rapidly catching up. In August 2020, Western Digital announced that 
its revenues from sales of enterprise SSDs more than doubled in revenue 
compared to the previous year, while between 2017 and 2019 Micron more 
than doubled its share in PCIe eSSD.  
(184) Fourth, the Transaction is not likely to affect the vertical integration in the SSD 
industry, which is asymmetric  across the different suppliers, result ing in different 
production costs. SSD suppliers have adopted different make/buy strategies regarding 
the key SSD components, i .e, NAND, controllers and firmware, including in-house 
production, outsourcing, or a combination of the two. In terms of downstream 
integration, the leading SSD competitor, Samsung, is active in in PCs and servers that incorporate SSDs, while other SSD suppliers are not. 
(185) Fifth, SSD and its segmentations  are overall not a homogeneous product as they need 
to be customised on the basis of customer requirements. SSDs differ in terms of 
characteristics such as performance, endurance and reliability and, to a les ser extent, 
other features (such as power consumption). SSDs are customized to meet customer 
specific performance and endurance requirements and undergo customer qualification 
processes to ensure they meet the specifications of the customer's system or device. 
The high degree of SSD differentiation results in numerous different SSD types with 
different characteristics, applications and prices. The Transaction is not likely to alter 
the way SSDs are produced and therefore is not expected to make coordination overall 
more likely.  
(186) The results of the market investigation thus confirmed that customers often require 
customized SSDs in order to meet their needs and requirements.
133 SSDs may be 
                                                 
133  Replies to Questionnaire, question s 78 and 78.1.  
 
39 designed with different end applications in mind, such as enterprise or consumer 
applications. For example, they may have different storage capacities or interfaces. 
Customers switch between solutions to suit their needs.134 Almost all market 
respondents confirmed that supply and demand fluctuate, with the market going though oversupply and undersupply cycles which are sometimes driven by changes in demand, but they are also sometimes driven by the investment choices of suppliers.
135 
(187) Sixth, the Transaction will not lead to a change in the way contracts are negotiated 
between suppliers and customers. Typically, suppliers conclude framework sales 
contracts and customers then make purchase undertakings, where volumes and prices 
are negotiated, within such framework sales contracts. As sales are lumpy and infrequent, each sale opportunity would be valuable for each competitor thus 
minimising the incentive to adhere to a coordinated behaviour. 
(188) In the course of the market investigation, competitors and customers explained that 
prices are not transparent.
136 SSD pricing is competitive and is on e of the key 
parameters on which competition between suppliers takes place. Transparency exist 
only for historic prices stemming from the fact that retail prices are typically published 
on the websites of suppliers, distributors and re -sellers of SSDs.137 Suppliers have no 
visibility into planned price increases of their competitors as due to the competitive nature of the sector, pricing is entirely driven by supply and demand. As such, 
variations in prices occur in real time in response to these factors.
138 Therefore, if a 
supplier were to plan a price increase or decrease, this would not be known to its 
competitors. Similarly, volumes sold are not transparent either, and industry reports 
only publish historic figures that the suppliers choose to share.139 Spare capacity or 
capacity expansion are generally not publicly available.140 
5.3.2.2. Sustainability of coordination  
(189) The Commission considers that the Transaction will not increase the likelihood of 
sustainable coordination on the markets and segmentations  for NAND/3D NAND and 
SSDs.  
(A) Monitoring deviations  
(190) The Commission considers that the Transaction is not likely to create conditions that 
would allow monitoring of deviations from a potential coordination strategy regarding either NAND or SSD.  
(191) In addition to the findings de scribed above in Section 5.3.3.1, the Commission 
considers that the Transaction is not likely to create such conditions  that will allow the 
monitoring of deviations from a hypothetical coordination strategy. The market 
investigation confirmed
141 that contract negotiations between suppliers and customers 
are usually bilateral and remain opaque in all their elements, including price, duration 
                                                 
134  Replies to Questionnaire, question 78.1.  
135  Replies to Questionnaire, question s 79 and 79.1.  
136  Replies to Questionnaire, question s 81 and 81.1.  
137  Replies to Questionnaire, question  81.1.  
138  Replies to Questionnaire, question  81.1.  
139  Replies to Questionnaire, question s 83 and 83.1.  
140  Replies to Questionnaire, question  84. 
141  Replies to Questionnaire, question s 70, 71, 72 and 74.  
 
40 and volumes. Non-disclosure agreements are put in place to ensure that comme rcial 
terms remain confidential. Price increases or capacity expansions are not known to 
competitors. 
(192) Market reports do not publish NAND or SSD price or other terms of individual 
contracts. Market intelligence firms report only on historic aggregated data that th ey 
receive by each supplier without being in a position to verify  the accuracy of each 
supplier's transmitted data. Whilst the market reports offer a general understanding of 
the approximate, competitive pricing level for each component from custome rs or 
general industry knowledge, competitors  cannot ascertain prices or commercial terms 
offered by competing suppliers for any given contract. These conditions make  
monitoring the enforcement of a hypothetical coordination and deviations highly unlikely.  
(B) Deterrent mechanism  
(193) The Commission considers that the Transaction is not likely to enable the 
establishment of a credible deterrent mechanism that would discourage competitors 
from deviating from a hypothetical coordination strategy in NAND or SSD.  
(194) On the  basis of the findings above in paragraphs (195)-(197)  the Transaction would 
not make the market more transparent as regards prices, volumes, spare capacity and 
capacit y expansion, or other commercial terms, as also confirmed by the market 
investigation
142. NAND and SSD customers can create strong incentives for 
aggressive price competition, while increasing the difficulty for competitors of 
enforcing a hypothetical deviat ion deterrence mechanism against deviators.  
(195) In addition, the short technological cycle of the NAND and SSD products would not allow for a competitor not adhering to such hypothetical coordination to be detected. 
Also, the gains from deviation from a hypothetical coordination would be significant due to the expected profits made with next generation products.  
(196) Therefore, the establishment of a credible deterrent mechanism  would not be enabled 
by the Transaction as it could not impact the existing market conditions for NAND and SSD.  
(C) Reaction of outsiders  
(197) The Commission considers that the Transaction is not likely to decrease the ability or 
the incentive of competitors and customers to disrupt a potential coordination strategy. 
(198) As explained above in Section 5.2, the market for NAND and SSD is characterized by 
the presence of a significant number of competitors with asymmetric and fluctuating 
capacity and market positions. Both markets  are also characterized by new ent ry and 
expansion efforts, which would destabilize any coordination attempt.  
(199) NAND and SSD customers are sophisticated technology companies, familiar with the 
cost structure of NAND and SSD suppliers, able to design and negotiate favourable 
contracting terms  that can help deter any coordination attempt. Key Enterprise SSD 
customers in particular are  powerful hyperscale cloud service providers, such as 
Google, Microsoft, Amazon Web Services, Huawei, Alibaba and Baidu, as well as 
                                                 
142  Repl ies to Questionnaire, sections E and F.  
 
41 sizeable, sophisticated OEMs wi th significant technical understanding and expertise, 
including Lenovo, Dell, HPE and others.  
(D) SK hynix’s link to Kioxia  
(200) The Commission considers that the Transaction is not likely to create coordination on 
the NAND or SSD markets as a result of SK hynix’s existing link to Kioxia.  
(201) SK hynix’s interest in Kioxia does not amount to decisive influence. […].  
(202) This situation will remain unchanged by the Transaction, which will not alter  the 
nature of SK hynix’s interest and lack of control  over Kioxia. Consistent with this 
assessment, r espondents to the  market investigation143 did not raise any concerns vis -
à-vis the existing interest of SK hynix in Kioxia.  
5.3.2.3. Conclusion on coordinated effects  
(203) The Commission concludes that in light of the above and in particular the res ults for 
the market investigation the Transaction is not likely to (i) enable NAND and SSD 
suppliers to reach terms of coordination, or (ii) make coordination sustainable in the 
markets for NAND and SSDs.  
5.4. Vertical  non-coordinated  effects  
5.4.1. Legal framework  
(204) As mentioned in Section 5.1 above, t he Non-horizontal Merger Guidelines recognise 
that non-horizontal concentrations are generally less likely to significantly impede effective competition than horizontal concentrations.
144 These concentrations may 
significant ly impede competition in two main ways: non-coordinated effects and 
coordinated effects.145 This section will assess potential non-coordinated effects, as 
potential coordinated effects were assessed in section 5.3 above. 
(205) Vertical non-coordinated effects may principally arise when non-horizontal 
concentrations give rise to foreclosure .146 The Non- Horizontal Merger Guidelines 
distinguish between two forms of foreclosure. Input foreclosure occurs where the 
concentration is likely to raise the costs of downstream c ompetitors by restricting their 
access to an important input. Customer foreclosure occurs where the concentration is 
likely to foreclose upstream competitors by restricting their access to a sufficient 
customer base.147 
(206) As regards ability to foreclose, input  foreclosure may lead to competition problems if 
the upstream input is important for the downstream product and if the vertically integrated merged entity have a significant degree of market power in the upstream 
market. It is only in those circumstances t hat the merged entity can be expected to 
have significant influence on the conditions of competition in the upstream market and 
                                                 
143  Repl ies to Questionnaire, question 31 and 40.  
144  Non-Horizontal Merger Guidelines, paragraph 11.  
145  Non-Horizontal Merger Guidelines, paragraph 17.  
146  Non-Horizontal Merger Guidelines, paragraph 18.  
147  Non-Horizontal Merger Guidelines, paragraph 30.  
 
42 thus, possibly, on prices and supply conditions in the downstream market.148 Customer 
foreclosure may be  a concern when it involve s a company which is an important 
customer with a significant degree of market power in the downstream market. If, on 
the contrary, there is a sufficiently large customer base, at present or in the future, that 
is likely to turn to independent suppliers, t he Commission is unlikely to raise 
competition concerns on that ground.149 
(207) With respect to incentives to foreclose, the incentive of the merged entity to foreclose depends on the degree to which foreclosure would be profitable. In relation to input 
foreclosure, the merged entity faces a trade -off between the profit lost in the upstream 
market due to a reduction of input sales to rivals and the profit gain, in the short or 
longer term, from expanding sales downstream or, as the case may be, being able to 
raise prices to consumers.
150 In relation to customer foreclosure, the trade -off is 
between the possible costs associated with not procuring products from upstream rivals and the possible gains from doing so, for instance, because it allows the merged 
entity to raise prices in the upstream or downstream markets.
151 
(208) As regards the effects on competition, input foreclosure raises competition concerns 
when it leads to increased prices on the downstream market.152 If there remain 
sufficient credible downstream competitors  whose costs are not likely to be raised, 
competition from those firms may constitute a sufficient constraint on the merged 
entity and therefore prevent output prices from rising above pre -merger levels.153 By 
denying competitive access to a significant cust omer base for the foreclosed rivals’ 
(upstream) products, the merger may reduce their ability to compete in the foreseeable future. As a result, rivals downstream are likely to be put at a competitive disadvantage 
(e.g., raised input costs), which may allow the merged entity to profitably raise prices 
or reduce the overall output on the downstream market.
154 If there remain a number of 
upstream competitors that are not affected, competition from those firms may be 
sufficient to prevent prices from rising in t he upstream market and, consequently, in 
the downstream market.155 
5.4.2. Affected markets  
(209) A market is considered to be affected when one or more of the parties to the 
concentration are engaged in business activities in a relevant market, which is 
upstream or downs tream of a relevant market in which any other party to the 
concentration is engaged, and any of their individual or combined market shares at either level is 30% or more, regardless of whether there is or is not any existing 
supplier/customer relationship between the parties to the concentration. The only market where the combined market shares of the Parties exceeds 30% is the market 
for eSSDs, as well as the possible narrower markets of SATA eSSDs and PCIe eSSDs. 
The Transaction gives rise to two vertical  relationships, as both NAND (including 2D 
                                                 
148  Non-Horizontal Merger Guidelines, paragraphs 34 -35. 
149  Non-Horizontal Merger Guidelines, paragraph 61.  
150  Non-Horizontal Merger Guidelines, paragraph 40.  
151  Non-Horizontal Merger Guidelines, paragraph 68.  
152  Non-Horizont al Merger Guidelines, paragraphs 47 -49. 
153  Non-Horizontal Merger Guidelines, paragraph 50.  
154  Non-Horizontal Merger Guidelines, paragraph 72.  
155  Non-Horizontal Merger Guidelines, paragraph 74.  
 
43 NAND and 3D NAND) and DRAM can be an input product to eSSDs, including 
SATA eSSDs and PCIe e SSDs.  
(210) Regarding the first vertical relationship, both SK hynix and the Target Business 
produce NAND flash memory, which i s an input for SSDs, in which they are also both 
active . In the market for NAND and in the narrower market for 2D NAND, the Parties’ 
combined market share rema ins below 20% (respectively [10-20]% and [10-20]%). In 
3D NAND, the Parties have a combi ned marke t share in 2019 of [20-30]%.156 As the 
Target Business no longer has activities in 2D NAND, the Commission focussed its assessment on the market for N AND and the potential narrower market for 3D NAND. 
On the downstream market for SSDs, the Parties have a com bined 2019 market share 
in eSSDs of [30-40]%
157, and have combined 2019 market shares in the possible 
narrower market s of SATA eSSDs an d PCIe eSSDs of respectively [30-40]%158 and 
[40-50]%159.  
(211) Regarding the second vertical relationship, SK hynix develops and ma nufactures 
DRAM. DRAM can be incorporated into eSSDs as cache memory, where they are 
used for data and graphic applications in data centers or servers . SK hynix has a 2019 
market share of [20-30]% in the market for DRAM.160 
(212) Because the Parties’ combined mark et shares in eSSDs as well as the market 
segmentations  of SATA eSSDs and PCIe SSDs exceed 30%, the two vertical 
relationships described above are both affected.  
(213) In this decision, the Commission assesses whether the Transaction would likely confer 
on the Pa rties the ability and incentive to implement an input foreclosure and/or a 
customer foreclosure  strategy  with regard to: (i) the Parties’ NAND / 3D NAND and 
eSSD products, including SATA and PCIe eSSDs (section 5.4.3); and (ii) SK hynix’ 
DRAM products, inc luding high -speed DRAMs and DRAMs used in servers, and the 
Parties’ eSSD products, including SATA and PCIe eSSDs (section 5.4.4).  
(214) While the Commission’s assessment takes into account the market for eSSDs as well 
as potential narrower markets for SATA and P CIe eSSDs, it should be noted that 
throughout the market investigation, respondents provided the same information in 
relation to these three markets and  did not indicate that their answers to questions 
regarding the Parties’ vertical relationships for eSS Ds, SATA eSSDs or PCIe eSSDs  
would differ.161 The market structure for eSSDs, SATA eSSDs and PCIe eSSDs are 
broadly similar and most market participants are active in all markets. Moreover, the 
suppliers of eSSDs that responded to the market investigation indicate that it would 
be relatively easy to switch between SATA and PCIe interfaces with little additional 
cost and effort.162However, given that the Parties combined market share for PCIe 
eSSDs is significantly higher than in the markets for eSSDS and SATA e SSDS, the 
Commission assessed in particular whether foreclosure concerns would arise in 
                                                 
156  Form CO, Table 10.  
157  Form CO, Table 12.  
158  Form CO, Table 14.  
159  Form CO, Table 15.  
160  Form CO, Table 18.  
161  Replies to Questionnaire, questions 90.2, 91.2, 92.2, 93.1, 94.1, 95.2, 101.1, 102.1, 104.1, 105.1, 106.1, 
107.1, 108.1, 115.1 and 116.1.  
162  Replies to Questionnaire, question 19.2.  
 
44 relation to the vertical relationship between the Parties’ NAND (including 3D NAND) 
and DRAM products, and the Parties’ PCIe eSSDs.  
5.4.3. NAND/ eSSDs 
5.4.3.1. Input foreclosure  
(A) Potenti al concern  
(215) The Commission has assessed the ability and incentive of the Parties post -Transaction 
to foreclose competing suppliers of eSSDs  (including SATA and PCIe eSSDs) by:  
i. restricting their access to the Parties’ NAND / 3D NAND; or  
ii. supply ing NAND / 3D NAND at  worse terms  (e.g. by increasing prices).  
(B) The Notifying Party’s views  
(216) The Notifying Party claims that the Parties will lack both the ability and the incentive 
post-Transaction to foreclose access to the Parties’ NAND and 3D NAND by refusing 
to suppl y competing suppliers of eSSDs or by supplying NAND or 3D NAND under 
worse terms.  
As regards ability  
(217) First, the Notifying Party submits  that third party NAND sales of SK hynix amount to 
approximately […]% of its 2019 NAND revenues. Of these third party sal es, only 
around […]% was destined for SSDs. As to Intel, its third party NAND sales account for approximately […]% of its 2019 NAND revenues and only around […]% for the 
first half of 2020. Therefore, the Parties would not be able to foreclose access to 
NAND products.  
(218) Second, many of the Parties’ major competitors in the downstream SSD markets are 
vertically integrated companies with in-house NAND production (i.e. Samsung, 
Kioxia, Western Digital and Micron). 
(219) Third, the Notifying Party submits that downstre am SSD suppliers that are not 
vertically integrated will continue to have ample alte rnative sources of NAND supply, 
including Samsung (with a market share of approximately [30-40]%), Kioxia (approximately [10-20]%), W estern Digital (approximately [10-20]%) and Micron 
(approximately [10-20]%). Moreover, the Notifying Party argues that the expansion 
of the vertically integrated player YMTC in the NAND flash memory sector is 
expected to have a material impact on the position of incumbent players.  
(220) Finally, the Notifying Party submits that, according to its best estimates, it would require approximately six months for NAND customers to switch to alternative 
NAND suppliers and this time would even be shorter where the customer has qualified 
multiple NAND suppliers . 
As regards incentives  
(221) The Notifying Party submits that the Parties will not have the incentive post -
Transaction to foreclose access for competing SSD suppliers to their NAND products, or only to provide these products at worse terms. 
 
45 (222) According to the Not ifying Party, the restriction of access to the Parties’ NAND 
products would mean that the Parties would exit a profitable business without at the 
same time gaining any competitive advantages in the downstream SSD markets. Most 
competitors in SSDs are verti cally integrated in NAND. Furthermore, non- integrated 
SSD competitors would have access to a wide array of NAND suppliers to whom they 
could easily switch. 
As regards effects  
(223) First, the Notifying Party argues that any potential input foreclosure strategy w ould 
have no effects on competition, as both the Parties and most of their competitors are 
already vertically integrated in NAND and SSDs. The Transaction would therefore 
have no impact on these competitors.  
(224) Second, given the relatively small c ombined sha re in 3D NAND of [20-30]%, which 
includes third-party and captive sales), non-vertically integrated SSD competitors 
have ample alternative sources of NAND supply.  
(C) Commission’s assessment  
(225) For the reasons set out below, the Commission considers that the Part ies will not have 
the ability or incentive post -Transaction to engage in an input foreclosure strategy. 
Moreover, any such strategy would likely not have any material effect on competition. 
As regards ability  
(226) The Commission considers  that the Parties will not have the ability to engage in input 
foreclosure. 
(227) According to paragraph 34 of the Non- Horizontal Merger Guidelines, input 
foreclosure only raises competition concerns if the upstream product is an important 
input for the product downstream. This is the  case, for example, when the input 
concerned represents a significant cost factor relatively to the price, where the 
upstream product represents a significant source of product differentiation for the downstream product or where the cost of switching is re latively high.  
(228) The Notifying Party itself admits that NAND flash memory is a key input for SSDs. 
The results of the market investigation indicate that a majority of the respondents 
consider that it is easy for SSD suppliers to switch between NAND products
163 and 
that end-customers would not be affected by a switch in NAND .164 The fact that 
customers are able to switch producers  does not mean however that a product is not 
an important input. Therefore, Commission considers that NAND represent s a key 
input for SS Ds. 
(229) The Non-Horizontal Merger Guidelines further state that input foreclosure only is a 
concern where the vertically integrated firm resulting from the merger has a significant 
degree of market power in the upstream market.165 
                                                 
163 Replies to Questionnai re, question 91.  
164  Replies to Questionnaire, question 92.  
165  Non-Horizontal Merger Guidelines, paragraph 35.  
 
46 (230) The Parties’ combined market shares in the market for NAND and the potential 
narrower market for 3D NAND are relatively modest  (respectivel y [10-20]% and [20-
30]%). In both markets, several important competitors will remain active following the Transaction and Samsung will remain by far the large st competitor (respectively 
[30-40]% and [30-40]%). Three other competitors will also remain active, each having 
market shares between 10 and 20% in both the markets for NAND and 3D NAND. 
All large market players are vertically integrated and als o supply SSDs (including 
SATA eSSDs and PCIe eSSDs).  […].
166167  
(231) The Commission considers that the above suggests  that potential input foreclosure 
does not raise competition concerns. 
(232) Moreover, a majority of the respondents to the market investigation indicate that in their view the Parties will not have the ability to either stop supplying NAND or to do 
so at worse terms.
168 In particular, respondents observe that “ [t]here will be sufficient 
suppliers of NAND, making this strategy unprofitable.”169 This confirms the 
Commission’s finding regarding the market structure for the market for NAND and 
the potential narrower market for 3D NAND as set out above.  
(233) In light of the above, the Commission concludes that the Parties will not have the 
ability to foreclose competitors on the market for the supply of eSSDs (and the market 
segmentations  for SATA and PCIe eSSDs) by restricting access to potentially critical 
inputs.  
As regards incentives  
(234) The Commission considers that the Parties will lack the incentive to engage in input 
foreclosure because it would not be profitable to do so. 
(235) The Parties would face a trade -off between the potential loss of profit in the upstream 
market due to a reduction of input sales to downstream competitors and the potential 
profit gain from expanding  sales downstream or raising prices to consumers.170 
(236) In this regard, the Commission observes first that, as mentioned above, respondents to 
the market investigation indicate that the SSD market is highly competitive.171 Most 
of the competitors that supply eSSD s, as well as SATA and PCIe SSDs, are vertically 
integrated and would therefore not be impacted by an input foreclosure strategy. Table 
1 below illustrates the market shares of the vertically integrated competitors on these markets:  
                                                 
166 Replies to Questionnaire, question 90.  
167  Replies to Questionnaire, question 90.1.  
168  Replies to Questionnaire, question 93.  
169  Replies to Quest ionnaire, question 93.1.  
170  Non-Horizontal Merger Guidelines,  paragraph 40.  
171  Replies to Questionnaire, question 90.1.  
 
47 Table 8: market shares of vertically integrated companies supplying eSSDs  
 eSSDs   
(2019)  SATA eSSDs  
(2019)  PCIe SSDs   
(2019)  
Parties combined  [20-30]%172 [30-40]% [40-50]% 
Samsung  [30-40]% [30-40]% [30-40]% 
Kioxia  [10-20]% [0-5]% [5-10]% 
Micron  [5-10]% [20-30]% [0-5]% 
Western  Digital  [5-10]% [0-5]% [5-10]% 
Total  [80-90]% [90-100]% [80-90]% 
 Tables 12, 14 and 15 of the Form CO  
(237) The remaining non-vertically integrated competitors can easily switch to other NAND 
suppliers.173 All respondents to the market investigation who express ed an opinion 
consider that sufficient NAND suppliers remain on the market.174 The Commission 
considers that, since non-vertically integrated competitors could easily switch to other 
NAND suppliers, the Parties would likely not be able to obtain a larger market share downstream as a result of a potential input foreclosure strategy. In this regard, it is 
worth noting that all respondent s to the market investigation who expressed an opinion 
indicate that the Transaction will either have a positive or a neutral effect on the market 
for NAND and the potential narrower market for 3D NAND.
175 None of the 
respondents indicated that the Transaction would have a negative impact on their 
company.176 
(238) The potential profit gain on the downstream market for eSSDs (or the market  
segmentations  for SATA and PCIe eSSDs) therefore would likely be  non-existent or  
small as compared to the loss of profits on the upstream market s for NAND/ 3D NAND 
that would result from an input foreclosure strategy.  
(239) Finally, t he majority of the respondents to the market investigation indicate that the 
Parties will not have an incentive to engage in an input foreclosure strategy.177 
(240) In light of these findings and the outcome of the market investigation, the Commission 
concludes that the Parties would not have the incentive to engage into input 
foreclosure. 
As regards effects  
(241) The Commission considers that a potential input foreclosure strategy would likely 
have no material effect on competition. 
(242) First, as indicated above, only a small number of eSSD suppliers could potentially be 
foreclosed. This makes it less likely that the Transaction could be expected to result 
                                                 
172  Market shares according to Forward Insights. The Parties’ combined market share for eSSDs according to 
Omdia is [30- 40]%. As Omdia’s estimation of the Parties’ combined market share in eSSDs gives rise to 
vertically affected markets, this estimation is used earlier in this decision.  
173  Replies to Questionnaire, question 91.  
174  Replies to Questionnaire, question 95.  
175  Replies to Questio nnaire, question 142.  
176  Replies to Questionnaire, question 141.  
177  Replies to Questionnaire, question 94.  
 
48 in a significant price increase –  and therefore to significantly impede competition – in 
the downstream market.178 
(243) Second, vertically integrated compa nies constitute the largest part of the market for 
eSSDs as well as potential narrower markets for SATA eSSDs and PCIe eSSDs. These 
companies would be able to maintain a sufficient competitive constraint on the Parties 
following the Transaction.  
(244) Third, the  market investigation confirms that sufficient NAND  (and 3D NAND)  
suppliers remain on the market following the Transaction179 and that non-vertically 
integrated SSD suppliers may easily switch between NAND suppliers180. 
(245) In light of the above, the Commission considers that a decision post -Transaction to 
restrict access to the Parties’ NAND/ 3D NAND products would have no material 
impact on rival eSSD suppliers  (including suppliers of SATA and PCIe eSSDs).  
Conclusion  
(246) The Commission considers that, in view of the c onsiderations above and the results of 
the market investigation, the Transaction does not raise serious doubts as to its 
compatibility with the internal market with respect to potential input foreclosure on 
the upstream market s for NAND/ 3D NAND and the dow nstream market for eSSDs as 
well as the potential narrower markets  for SATA or PCIe eSSDs).  
5.4.3.2. Customer foreclosure  
(A) Potential concern  
(247) In theory, the Transaction could give rise to competition concerns on the basis of a potential customer foreclosure strategy whereby the Parties, as eSSD suppliers, would 
decide to foreclose any rivals on the upstream market for 3D NAND.  
(B) The Notifying Party’s views  
(248) The Notifying Party submits that the Transaction will not lead to any customer 
foreclosure. 
(249) First, the Notifying Pa rty submits that neither SK hynix nor the Target Business 
currently source any of their NAND requirements from third parties. The Transaction 
would therefore not affect customer access for upstream NAND suppliers.  
(250) Second, the Notifying Party argues that the Parties would not have the ability to 
foreclose customers due to its combined share in the overall market for SSDs.  
(251) Finally, any foreclosed NAND suppliers would also have access to other downstream 
areas that incorporate NAND, such as embedded flash storage for use in smartphones, tablets, automotive and other applications.  
(252) The Notifying Party submits that any incentive to foreclose access to the NAND 
customer base would be entirely theoretical given that the Parties currently do not  
                                                 
178  Non-Horizontal Merger Guidelines, paragraph 48.  
179  Replies to Questionnaire, question 95.  
180  Replies to Questionnaire, question 91.  
 
49 source any of their NAND requirements from third parties. For this reason, the 
Notifying Party argues that any effect of a customer foreclosure strategy would be 
hypothetical and implausible. 
(C) Commission’s assessment  
(253) The Commission considers that the Transaction does not give rise to concerns that the 
Parties may engage in a customer foreclosure strategy post -Transaction.  
(254) Neither SK hynix nor the Target Business currently procure any NAND  or 3D NAND  
from third parties . Therefore, the Transaction does not remove any important buyer 
from the market and it would not give the Parties the ability or the incentive to engage 
in a customer foreclosure strategy. For this reason, the Transaction will not have an 
effect on the market for NAND or on the potential market for 3D NAND as a consequence of a potential customer foreclosure strategy.  
(255) This assessment is confirmed by the  results of the  market investigation, with the 
majority of respondents  confirm ing that  the Parties will neither have the ability
181 nor 
the incentive182 to engage in a c ustomer foreclosure strategy and that in any event a 
sufficient number of NAND /3D NAND buyers remains on the market183 following the 
Transaction.  
Conclusion  
(256) The Commission considers that, in view of the considerations above and the results of 
the market investigation, the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to potential customer foreclosure 
on the upstream market for NAND or a potential upstream market for 3D NAND and 
the downstream market for eSSDs or potential narrower market s for SATA or PCIe 
eSSDs.  
5.4.4. DRAM/SSD  
5.4.4.1. Input foreclosure  
(A) Potential concern  
(257) The Commission has assessed the ability and incentive of the Parties to foreclose 
competing eSSD suppliers by restricting their access to potentiall y critical inputs, i.e., 
SK hynix’ DRAM. In doing so, the Commission investigated whether the Parties 
would be able, post -Transaction, to either stop supplying DRAM  (more specifically 
high-speed DRAMs and DRAMs used in servers)  to other eSSD suppliers or t o do so 
at worse terms ( e.g. through higher prices).  
(258) The Commission’s assessment focussed on high-speed DRAMs and DRAMs used in 
servers. eSSDs are used for enterprise storage (storage for servers and storage systems in high workload environments, such as c orporate data centres). DRAM can be 
included into eSSDs as cache memory for writing data to the eSSD and to improve 
                                                 
181  Replies to Questionnaire, question 101.  
182  Replies to Questionnaire, question 102.  
183  Replies to Questionnaire, question 103.  
 
50 performance. DRAMs used in eSSDs are therefore high- speed DRAMs that are meant 
to be used for servers.  
(B) The Notifying Party’s views  
(259) The Notifying Party argues that it will not be able to foreclose access to DRAM for 
downstream SSD competitors . 
(260) First, the Notifying Party submits that the merged entity w ould have a global share of 
[20-30]% in DRAM. The Parties would therefore lack the market powe r, post -
Transaction, to restrict its downstream competitors in SSDs from accessing DRAM.  
(261) Second, there would be ample sources of alternative DRAM suppliers including Samsung (with a market share of approximately [40-50]%), Micron (approximately 
[20-30]%) a s well as smaller competitor s such as Nanya (approximately [0-5]%) and 
Winbond (approximately [0-5]%).  
(262) Third, the Notifying Party submits that DRAM is a commoditized product and SSD 
suppliers would therefore be able to switch to alternative DRAM suppliers relatively 
quickly without incurring significant cost.  
(C) Commission’s assessment  
(263) For the reasons set out below, the Commission considers that the Parties will not have 
the ability or incentive post -Transaction to engage in an input foreclosure strategy. 
More over, any such strategy would likely not have any material effect on competition. 
As regards ability  
(264) The Commission considers that the Parties will likely not have the ability post -
Transaction to engage in input foreclosure.  
(265) As mentioned above, DRAMs used in eSSDs are high -speed DRAMs that are mean t 
to be used for servers. The Commission considers that high-speed DRAMs, while 
different from commodity DRAMs, are still commoditized products from a demand-
side perspective, as their specifications are standardi sed by JEDEC (Joint Electron 
Device Engineering Council).
184 
(266) This is confirmed by the results of the  market investigation. Respondents to the market 
investigation almost unanimously indicate d that it is easy or even very easy to switch 
the supply of DRAM.185 One respondent states that “ DRAM is not a key component 
for SSDs; the DRAM is used by a memory controller to manage the NAND. Switching 
the DRAM would not require a re -design, but would require a requalification.”186 
Another respondent “ views DRAM as a standardized commodity; it is even more 
standardized than SSD with less brand loyalty. Therefore, it is easily sourced and 
multi-sourced from many parties for SSD manufacturing”.187 
                                                 
184  See also Case JV.44 Hitachi/NEC —  Dram/JV , paragraph 18.  
185  Replies to Questionnaire, question 105.  
186  Replies to Questionnaire, question 105.1.  
187  Replies to Questionnaire, question 105.1.  
 
51 (267) As commoditized products , DRAM s do not appear to be a significant source of 
produc t differentiation. One respondent to the market investigation indicates in this 
regard that “ [t]he origin of the DRAM in an end product is not as relevant to the end-
customer because it represents a small percentage of the build material and is a truly 
integrated component. For example, customers will rarely, if ever enquire as to the 
origin of the DRAM. ”188 Overall, a ll but one respondent to the market investigation 
who expressed an opinion state that the origin of the DRAM input is not important for 
the end-customer.189 
(268) The Non-Horizontal Merger Guidelines further state that input foreclosure only is a concern where the vertically integrated firm resulting from the merger has a significant 
degree of market power in the upstream market.
190 
(269) SK hynix is already  a vertically integrated undertaking that is active both in the supply 
of DRAM  (including high-speed DRAMs used in eSSDs)  and in the supply of eSSDs. 
The Target Business is not active in the supply of DRAM. The Parties will therefore 
not enhance their market power on any upstream DRAM market as a result of the 
Transaction. The market investigation results reveal that SK hynix is considered as an 
important player in DRAM , in particular because SK hynix currently i s the second 
largest DRAM supplier.191 The Commissi on considers however that the market share 
of SK hynix remains below 30% and SK hynix will not increase its market power as 
a result of the Transaction. SK hynix therefore does not appear to have a significant 
market power. 
(270) Despite the fact that SK hynix i s considered to be an important player in DRAM, all 
respondents to the market investigation who expressed an opinion further state that 
the Parties will not have the ability to stop supplying DRAM following the Transaction.
192 Respondents consider that suffi cient alternative suppliers of DRAM 
remain on the market (including vertically integrated undertakings that are also active 
in the supply of eSSDs like Samsung and Micron). One respondent  to the market 
investigation states that it is unlikely that SK hynix will have the ability to enter into 
an input foreclosure strategy “[…] as DRAM is easily replaceable and a small portion 
of the inputs/costs of SSD products”.193 
(271) Taking into account that high-speed DRAMs are commoditized products which are 
not a source of product differentiation, that it is easy or even very easy for consumers 
to switch between DRAMs, and that DRAMs are a small portion of the inputs/costs 
of eSSDs, the Commission concludes that DRAMs (including high-speed DRAMs) 
are not an important input for eSSDs (including SATA and PCIe eSSDs).  
(272) The Commission considers that the above suggests  that potential input foreclosure 
does not raise competition concerns. 
(273) In light of the above, the Commission concludes that the Parties will not have the 
ability to foreclose competitors on the market for the supply of eSSDs (and the 
                                                 
188  Replies to Questionnaire, question 106.1.  
189  Replies to Questionnaire, question 106.  
190  Non-Horizontal Merger Guidelines, paragraph 35.  
191  Replies to Questionnaire, question 104.  
192  Replies to Question naire, question 107.  
193  Replies to Questionnaire, question 107.1.  
 
52 possible markets for SATA and PCIe eSSDs) by restricting access to potentially 
critical inputs.  
As regards incentives  
(274) The Commission considers that the Parties will lack the incentive to engage in input 
foreclosure because it would not be profitable to do so. 
(275) The Parties would face a trade -off between the potential loss of profit in the upstream 
market due to a reduction of input sales to downstream competitors and the potential 
profit gain from expanding sales downstream or raising prices to consumers.194 
(276) The potential profit gain from expanding sales of eSSDs  (including SATA and PCIe 
eSSDs)  or raising prices to consumers for eSSDs would likely be low, since eSSD 
suppliers can easily switch to other (high- speed) DRAM suppliers.195 
(277) Moreover, a respondent to the market investigation indicates that the Parties would not have the incentive to stop supplying DRAM  because it is both easily replaceable 
and represents only a small portion of the input/costs of SSD products.
196 Another 
respondent submits that SK hynix would not have the incentive to foreclose eSSD suppliers, because it would make them “ less competitive (and could see them pushed 
out of the market)”.
197 Finally, the majority of the respondents indicate that the Parties 
would not have the incentive post -Transaction to stop supplying DRAM or to do so at 
worse terms.198 
(278) The Commission considers that the above suggests that the Parties would not have an incentive to adopt an input foreclosure strategy as it appears that there are little 
potential profit gains on the downstream market for eSSDs (or on its market 
segmentations for SATA and PCIe eSSDs).  
As regards effects  
(279) Finally, t he Commission considers that a potential input foreclosure strategy would 
likely have no material effect on competition. 
(280) The Non-Horizontal Merger Guidelines set out that anticompetitive foreclosure may 
occur when a vertical merger allows the merging parties to increase the costs of 
downstream rivals.
199 The Commission considers t hat this would likely not be the 
case. T he Transaction does not increase the Parties’ market power in the upstream 
market for DRAM  or potential narrower markets for high-speed DRAMs or DRAMs 
used in servers . Therefore, the Parties will not be more likely, as a result of the 
Transaction, to increase the costs of downstream rivals by refusing to supply DRAM 
products or to only do so at worse terms. 
                                                 
194  Non-Horizontal Merger Guidelines,  paragraph 40.  
195  Replies to Questionnaire, question 105.  
196  Replies to Questionnaire, question 108.1.  
197  Replies to Questionnaire, question 108.1.  
198  Replies to Questionnaire, question 108.  
199  Non-Horizontal Merger Guidelines, paragraph 48.  
 
53 (281) Downstream competitors may also constitute a sufficient constraint on the merged 
entity if there are sufficient competitors remaining whose costs are not likely to be 
raised, for example because they are capable of switching to adequate alternative 
inputs.200 The results of the market investigation above indicate that sufficient credible 
downstream competitors remain whose costs are not likely raised because they are 
capable of switching to adequate alternative DRAM products.201 
(282) In light of the above, the Commission considers that a decision post -Transaction to 
restrict access to SK hynix’ DRAM products would have no mat erial impact on rival 
eSSD suppliers.  
Conclusion  
(283) The Commission considers that, in view of the considerations above and the results of 
the market investigation, the Transaction does not raise serious doubts as to its 
compatibility with the internal market with respect to potential input forec losure on 
the upstream market for DRAM or potential narrower markets for high- speed DRAMs 
or DRAMs used in servers, and the downstream market for eSSDs (or market 
segmentations  for SATA or PCIe eSSDs).  
5.4.4.2. Customer foreclos ure 
(A) Potential concern  
(284) The Commission further assessed the ability and incentive of the merged entity to source internally the entire quantity of DRAM it needs for its eSSDs, thereby 
foreclosing SK hynix’ competitors on the upstream market for DRAMs  or pote ntial 
narrower markets for high- speed DRAMs or DRAMs used in servers . 
(B) The Notifying Party’s views  
(285) The Notifying Party claims that the Parties will lack both the ability and the incentive 
post-Transaction to foreclose competing DRAM suppliers by internally sourcing the 
Parties’ entire DRAM needs. 
As regards ability  
(286) First, the Notifying Party submits that the merged entity will not represent an 
important customer base for DRAM suppliers. […]. The Target Business for its part 
would only represent a small share  of the total DRAM demand as it has a market share  
for 2019 of approximately [10-20]% on the overall SSD market. Moreover, the Target 
Business currently sources DRAM from multiple suppliers:  […].  
(287) Second, the combined market share in 2019 on the overall SSD  market is 
approximately [10-20]%. According to the Notifying Party, there would therefore still 
be a large customer base left in the SSD market  for DRAM supplies if the Parties 
would hypothetically decide to source all of its DRAM requirements internally.  
(288) Third, the Notifying Party argues that the total volume of total DRAM used in SSDs 
is negligible. According to Omdia, only [0-5]% of DRAM GB shipped in 2019 went 
                                                 
200  Non-Horizontal Merger G uidelines, paragraph 50.  
201  Replies to Questionnaire, question 109.  
 
54 into SSDs. DRAM is also incorporated into personal and mobile devices (such as 
smartphones and wearable devices), consumer electronics and computing 
systems/equipment (servers, switches etc.). This customer base for DRAM suppliers 
would in any event not be affected by the Transaction.  
As regards incentives  
(289) The Notifying Party submits that for the same reasons as above, a future strategy to 
source all DRAM requirements internally could not plausibly foreclose any DRAM 
rivals. SK hynix already sources all its DRAM requirements internally, whereas the 
Target Business would only represent a small share  of total DRAM demand. 
Moreover, SSDs are only one of the application areas where DRAM is used. 
As regards effects  
(290) Given the above arguments, the Notifying Party maintains that the Transaction cannot 
give rise to any plausible customer foreclosure concerns . 
(C) Commission’s assessment  
(291) For the reasons set out below, the Commission considers that the Parties will not have the ability or incentive post -Transaction to engage in a customer foreclosure strategy. 
Moreover, any such strategy would likely not have any m aterial effect on competition. 
As regards ability  
(292) The Commission considers that the Parties’ eSSDs do not represent a significant 
channel to market for competing DRAM suppliers.  
(293) First, for customer foreclosure to be a concern, the Transaction must involve a 
company that is an important customer with a significant degree of market power in 
the downstream market.
202 On the downstream market for SSDs, the Parties have a 
combined 2019 market share in eSSDs of [30-40]%203, and have combined 2019 
market shares in the  market segmentations of SATA eSSDs and PCIe eSSDs of 
respectively [30-40]%204 and [40-50]%205. Despite these market shares, the market 
investigation indicates that neither SK hynix  nor the Target Business are important DRAM buyers.
206 As regards SK hynix, the Commission finds  […].  Regarding the 
importance of the Target Business, one respondent  to the market investigation  
observes that “ Intel’s SSD business demand for DRAM is very small as a DRAM 
customer and likely would not feature as a top 25 customer of any DRAM supplier ”.207 
Moreover, the Commission finds that the Target Business procures DRAM from 
several suppliers (in 2020:  […]), which suggests that the Target Business is not an 
important buyer for a specific DRAM supplier.  
                                                 
202  Non-Horizontal Merger Guidelines, paragraph 61.  
203  Form CO, Table 12.  
204  Form CO, Table 14.  
205  Form CO, Table 15.  
206  Replies to Questionnaire, questions 110, 112 and 114.  
207  Replies to Questionnaire, question 110.1.  
 
55 (294) Second, according to paragraph 62 of the Non-Horizontal Merger Guidelines , if there 
is a sufficiently large customer base, at present or in the future, that is likely to turn to 
independent suppliers, the Commission is unlikely to raise competition concerns. All 
respondents to the market i nvestigation who expressed an opinion indicate that 
sufficient DRAM buyers would remain available post -Transaction.208 As mentioned 
above, […]. While the Target Business does procure DRAM from several suppliers, 
the Commission considers that it cannot be considered as an important buyer. The 
Target Business has a 2019 market share of [20-30]% in the overall market for SSDs  
and has higher market shares in the market segmentations for SATA eSSDs ( [30-
40]%) and PCIe eSSDs ([30-40]%). However, account  should also be taken of the 
existence of different markets corresponding to different uses for the input. The Non-Horizontal Merger Guidelines set out that an upstream supplier may continue to 
operate efficiently if it finds other uses or secondary markets for its input without 
incurring significantly higher costs.
209 In the present case, a ccording to Omdia, only 
[0-5]% of DRAM GB shipped in 2019 went into SSDs , such that alternative end-uses 
are very significant . The Target Business’ share  of demand for DRAMs would 
represent  around a quarter to a third of the  overall  DRAM demand for SSDs , which 
would amount to only approximately [0-5]% of DRAM GB shipped in 2019.  
Therefore, the Commission considers that competing DRAM suppliers will remain able to operate effectively following the Transaction.  
(295) In light of the above, the Commission concludes that the Parties will likely not have 
the ability to engage in a customer foreclosure strategy following the T ransa ction. 
As regards incentives  
(296) The Commission considers that the merge d entity would not have the incentive to 
engage in customer foreclosure because it would not be profitable to do so. 
(297) In fact, the Parties would face a trade -off between the possible costs associated with 
not procuring products from upstream DRAM suppliers and the possible gains from 
doing so.
210 
(298) The Commission considered that the possible costs for the Target Business if it decides 
to only procure DRAM from SK hynix will likely be low. DRAMs (including high-
speed DRAMs used in servers) are commoditized produc ts, and rival’s DRAM 
products are therefore not more attractive as a result of product differentiation.  
(299) While the possible costs are likely to be low, the Commission further considers that 
the Target Business will likely not be able to profit from signifi cant gains if it decides 
to no longer procure DRAM for rival DRAM suppliers. Possible gains could arise if, 
as a result of the foreclosure strategy, the merged entity could profit from possibly 
higher price -levels in the upstream market.211 Above, the Commis sion considered that 
the Target Business cannot be considered as an important buyer for DRAM. In particular, the Commission takes into account that, while the Target Business  has a 
2019 market share of [20-30]% in the overall market for SSDs and has higher market 
shares in the market se gmentations for SATA eSSDs ([30-40]%) and PCIe eSSDs 
([30-40]%), only [0-5]% of DRAM GB shipped in 2019 went into SSDs according to 
                                                 
208  Replies to Questionnaire, question 117.  
209  Non-Horizontal Merger Guidelines, paragraph 66.  
210  Non-Horizontal  Merger Guidelines, paragraph 68.  
211  Non-Horizontal Merger Guidelines, paragraph 70.  
 
56 Omdia. Moreover, the Target Business  […]. A foreclosure strategy would therefore 
only impact a part of it current DRAM demand. A foreclosure strategy whereby the 
Target Business would only procure DRAM from SK hynix therefore has a minimal 
impact on overall DRAM sales. A possible foreclosure strategy is therefore not 
expected to have any impact on  price -levels in the upstream market for DRAM or 
potential narrower markets for high- speed DRAMs or DRAMs used in servers. 
(300) Finally, the majority of the respondents to the market investigation indicate that they 
do not consider that the Parties have an ince ntive to stop purchasing DRAM.212 
(301) In light of these considerations, the Commission takes the view that the merged entity 
will likely not have the incentive to engage in a customer foreclosure strategy 
following the Transaction.  
As regards effects  
(302) The Commiss ion considers that a potential customer foreclosure strategy for DRAM 
would likely have no material effect on competition. 
(303) First, the Commission considers that even in the event of a customer foreclosure strategy, only part of the Target Business’ current DRAM demand would be foreclosed (as in 2020 the Target Business procured DRAM  […]).  
(304) Second, rival DRAM suppliers are largely protected from any foreclosure strategy on 
the market for eSSDs because of the existence of many other markets where DRAM 
is purcha sed. Accordi ng to Omdia, only […]% of DRAM GB shipped in 2019 went 
into SSDs.  
(305) Therefore, a decision post -Transaction whereby the Target Business would only 
purchase its DRAM needs from SK hynix would have no material impact on rival DRAM suppliers.  
Conclus ion 
(306) In light of the above considerations, the Commission considers that the Transaction 
does not raise serious doubts as to its compatibility with the internal market with 
respect to potential customer foreclosure on the upstream market of DRAM  or 
potentia l narrower markets for high-speed DRAMs or DRAMs used in servers, and 
the downstream market for eSSDs (or market segmentations for SATA or PCIe 
eSSDs).  
5.5. Conglomerate  non-coordinated  effects  
5.5.1. Legal framework  
(307) As mentioned in Section 5.1 above, conglomerate mer gers do not lead to any 
competition problems  in most circumstances .
213 
(308) In assessing the likelihood of conglomerate effects, the Commission examines, first, 
whether the merged entity would have the ability to foreclose its rivals  (through tying, 
                                                 
212  Replies to Questionnaire, question 116.  
213  Non-Horizontal Merger Guidelines, paragraph 92.  
 
57 bundling or other exclusionary practices), second, whether it would have the economic 
incentive to do so and, third, whether a foreclosure strategy would have a significant 
detrimental effect on competition. In practice, these factors are often examined 
together as the y are closely intertwined.214 
(309) Mixed bundling refers to situations where the products are also available separately, 
but the sum of the stand- alone prices is higher than the bundled prices.215 Tying refers 
to situations where customers that purchase one good (t he tying good) are required 
also to purchase another good from the producer (the tied good). Tying can take place 
on a technical or contractual basis.216 Tying and bundling as such are common 
practices that often have no anticompetitive consequences. Neverth eless, in certain 
circumstances, these practices may lead to a deduction in the actual or potential ability 
and incentive of rivals to compete. 
(310) In order to be able to foreclose competitors, the merged entity must have a significant 
degree of market power, which does not necessarily amount to dominance, in one of 
the markets concerned. The effects of bundling or tying can only be expected to be substantial when at least one of the merging parties’ products is viewed by many 
customers as particularly important and there are few relevant alternatives for that 
product.
217 Further, for foreclosure to be a potential concern, it must be the case that 
there is a large common pool of customers, which is more likely to be the case when 
the products are complementary.218 
(311) The incentive to foreclose rivals through bundling or tying depends on the degree to 
which this strategy is profitable.219 Bundling and tying may entail losses or foregone 
revenues for the merged entity.220 It may also increase profits by gaining market power 
in the tied goods market, protecting market power in the tying good market, or a 
combination of the two.221 
(312) It is only when a sufficiently large fraction of market output is affected by foreclosure 
resulting from the concentration that the concentration may s ignificantly impede 
effective competition. If there remain effective single -product players in either market, 
competition is unlikely to deteriorate following a conglomerate concentration.222 The 
effect on competition needs to be assessed in light of countervailing factors.223 
5.5.2. Affected markets  
(313) The Target Business is active in the manufacture and supply of both NAND products 
and SSDs (including market segmentations thereof). SK hynix is active in these 
markets as well. However, in addition to these, SK hynix als o manufactures and sells 
DRAM, managed NAND and CMOS products. 
                                                 
214  Non-Horizontal Merger Guidelines, paragraph  94. 
215  Non-Horizontal Merger G uidelines, paragraph  96. 
216  Non-Horizontal Merger Guidelines, paragraph  97. 
217  Non-Horizontal Merger Guidelines, paragraph  99. 
218  Non-Horizontal Merger Guidelines, paragraph  100.  
219  Non-Horizontal Merger Guidelines, paragraph  105.  
220  Non-Horizontal Merger Guidelines, paragraph  106.  
221  Non-Horizontal Merger Guidelines, paragraph 108.  
222  Non-Horizontal Merger Guidelines, paragraph 113.  
223  Non-Horizontal Merger Guidelines, paragraph 114.  
 
58 (314) In Section 5.4 above, the Commission assessed the vertical relationships between the 
upstream markets for respectively DRAM and NAND, and the downstream market 
for eSSDs (including market segme ntations for SATA and PCIe eSSDs).  
(315) In this Section, the Commission assesses potential foreclosure strategies through the 
bundling of the products of the Target Business with SK hynix’ DRAM, managed 
NAND and CMOS products. More specifically, the following potential bundles are assessed:  
i. the Target Business’ NAND with SK hynix’ DRAM;  
ii. the Target Business’ SSDs with SK hynix’ managed NAND; and 
iii. the Target Business’ NAND and SSDs with SK hynix’ CMOS image sensors.  
(316) As described above, DRAM are chips that are used in data and graphic processing 
applications in data centres  as well as in a wide array of IT devices for consumer 
applications. The DRAM busine ss accounts for approximately […]% of SK hynix’ 
global revenues. Both DRAM and NAND are SSD components. Table 2 below 
illustrates the 2019 market shares on a worldwide market for DRAM : 
Table 9: 2019 market shares on a worldwide market for DRAM  
 Sales value (USD 
million)  Market share (% sales 
by value)  
SK hynix  […] [20-30]% 
Samsung  […] [40-50]% 
Micron  […] [20-30]% 
Nanya  […] [0-5]% 
Winbond  […] [0-5]% 
Elite […] [0-5]% 
ISSI […] [0-5]% 
Etron  […] [0-5]% 
Others  […] [0-5]% 
Total  […] 100%  
 Table 18 of the Form CO  
(317) (Raw) NAND can be combined with a controller, or with both a controller and DRAM, 
to create “managed NAN D” (or embedded flash) products. Managed NAND is used 
in mobile phones and, to a lesser extent, in tablets and low -grade laptops (laptops and 
PCs commonly use hard drives and SSDs for storage). Table 3 below illustrates the 
2019 market shares on a worldwide market for managed NAND : 
 
59 Table 10: 2019 market shares on a worldwide market for managed NAND  
 Sales volume (in GB)  Market share (%)  
SK hynix  […] [10-20]% 
Samsung  […] [50-60]% 
Micron  […] [10-20]% 
Kioxia  […] [5-10]% 
Western Digital  […] [5-10]% 
Kingst on […] [0-5]% 
Longsys  […] [0-5]% 
Others  […] [0-5]% 
Total  […] 100%  
 Response to Request for Information dated 4 May 2021  
(318) According to the Notifying Party, there is no vertical relationship between the Target 
Business’ (raw) NAND and SK hynix’ s managed N AND. This is because the former 
cannot currently be integrated into the latter. SK hynix’s  managed NAND is optimized 
for SK hynix’s  NAND, which is more suitable for mobile uses. The NAND that the 
Target Business produces on the other hand is suitable for S SDs (in programming 
speed and densities) […]. SK hynix has no plans to develop managed NAND products 
with the Target Business’ NAND. Because of this, the Commission assesses the 
potential conglomerate effects  of potential bundles of the Target Business’s  SSDs with 
SK hynix’ managed NAND.  
(319) Lastly, CMOS image sensors are non- memory semiconductors that function as digital 
film in many IT devices. They are mainly used in digital cameras, smartphones and miniature medical imaging systems.  SK hynix’s  CMOS image se nsors are mainly sold 
for smartphone applications  and are sold to module houses ([…]) – usually designated 
by smartphone makers – that assemble components for smartphones and then sell to 
smartphone makers (e.g.[…]). Based on revenue, SK hynix’s  worldwide market share 
in 2019 (by value) for CMOS image sensors is [0-5]%. Further, Table 4 below 
illustrates the 2019 market shares on a worldwide market for CMOS image sensors : 
Table 11: 2019 market shares on a worldwide market for CMOS image sensors  
 Market shar e based on 
volume shipment (%)  
SK hynix  [5-10]% 
Sony  [20-30]% 
Samsung  [20-30]% 
OmniVision  [10-20]% 
GalaxyCore  [10-20]% 
Others  [10-20]% 
Total  100%  
 Table 19 of the Form CO  
(320) The respondents to the market investigation did not list any other products t han those 
mentioned above that could potentially be combined in product bundles.  
 
60 5.5.3. Potential concerns  
(321) The Commission assessed potential competition concerns in relation to potential  anti-
competitive conglomerate  strategies for the following combinations of products:  
i. the Target Business’ NAND with SK hynix’ DRAM;  
ii. the Target Business’ SSDs with SK hynix’ managed NAND; and 
iii. the Target Business’ NAND and SSDs with SK hynix’ CMOS image sensors.  
(322) In particular, the Commission assessed the ability and the incentive of the merged 
entity to engage in contractual tying by:  
• imposing the purchase of SK hynix’ DRAM if the customer wants to purchase 
the Target Business’ NAND  or vice versa ; 
• imposing the purchase of SK hynix’ managed NAND if the customer wants to purchase the T arget Business’ SSDs or vice versa ; and/or  
• imposing the purchase of SK hynix’ CMOS image sensors when the customer wants to purchase the Target Business’ NAND or SSDs.  
(323) Further, the Commission assessed the ability and the incentive of the merged entity to 
engage in mixed bundling by incentivising the joint purchase of the merged entity’s 
products by offering higher prices for mix-and-match solutions involving only one of 
its products as compared to the potential bundles set out above
224. 
5.5.4. The Notifying Party’s views  
(324) The Notifying Party submits that the Transaction will not  raise any competition 
concerns as a result of potential conglomerate effects. 
As regards ability  
(325) The Notifying Party argues that the Parties will not have the ability to engage in an 
anti-comp etitive leveraging strategy for several reasons. 
(326) First, SK hynix already has a presence in the markets relevant for the conglomerate effects assessment. The range of products of SK hynix will therefore remain 
essentially unchanged  following the Transaction.  
(327) Second, SK hynix would not have  market power in any relevant market. In NAND, 
the Parties’ combined market share for 2019 remains below 20% and in 3D NAND is 
[20-30]%. In SSDs, the Parties’ combined market share for 2019 is [10-20]% 
accor ding to Forward Insight and [20-30]% according to Omdia. In all of these 
markets (NAND, 3D NAND and SSDs), Samsung remains however by far the largest 
competitor and several other major players remain. The Parties’ combined market 
share for 2019 is higher in the market for eSSDs ([20-30]% accor ding to Forward 
Insight and [30-40]% according to Omdia) as well as in the market segmentations for SATA eSSDs ([30 -40]%) and PCIe eSSDs ([40-50]%). However, the Transaction 
                                                 
224  It is noted that there are no interoperability issues with regard to D RAM and DRAM; the market 
investigation and prenotification calls to market participants do not contradict this assessment.  
 
61 would not change the competitive landscape, because the sha re increment for eSSDs, 
SATA eSSDS and PCIe SSDs of respectively approximately [0-5]%, [0-5]% and [5-
10]% is small.  SK hynix’ market share in a worldwide market for DRAM remains 
below 30% and also here, Samsung is the largest competitor. Finally, in market s for 
managed NAND and CMOS image sensors, SK hyni x’ market share remains below 
[20-30]%. 
(328) The Notifying Party therefore submits that the  increased market share for NAND and 
SSDs would not be indicative of  SK hynix’ ability to engage in an anti -competitive 
leveraging strategy.  
(329) Third, the Notifying Party explains that customers typically negotiate quantities and 
prices for products separately, based on the prevailing conditions in the respective 
product market segmentations .  
(330) […], the Notifying Party submits that customers typically negotiate prices, quantities 
and delivery times separately. As DRAM is a commoditized product, there are no 
interoperability issues DRAM and NAND. Therefore, customers would be free to mix 
and match DRAM and NAND from different producers.[…].225 
(331) As regards a potential bundle comprising of SSDs and managed NAND, the Notifying Party submits that those products have different application areas and typically 
different customers. These products are therefore typically not bought together a nd a 
strategy to bundle SSD and managed NAND would not be meaningful.  
(332) For potential bundles comprising of NAND / SSDs and CMOS image sensors, the Notifying Party submits that the same argument applies. These products have different 
application areas and di fferent customers. 
(333) Fourth, the Notifying Party submits that  a number of competitors would be able to 
develop counter strategies, such as to offer competitive alternative bundles  comprising 
of NAND and DRAM, or SSDs and managed NAND.  
(334) As regards a potential  bundle  comprising of NAND and DRAM the Notifying Party 
observes that Samsung is the biggest competitor in each market  and would be easily 
able to replicate any hypothetical bundling strategy. Micron would be able to do the same since they are also activ e in both DRAM (approximately [20-30]%) and NAND 
(approximately [10-20]%).  
(335) Multiple competitors would also be able to replicate a potential bundle comprising of SSDs and managed NAND. Sa msung is market leader in both managed NAND and 
SSD, and is active in ea ch market . Micron is also active in both markets and in each 
market . Finally, Western Digital and Kioxia are also active in all market of SSDs, as 
well as in most types managed NAND.  
(336) Fifth, the Notifying Party considers that customers have sufficient power to defeat any 
attempt of an anti -competitive leveraging strategy.  The Notifying Party submits that 
customers for each of the products are typically sophisticated buyers with significant technical knowledge and expertise. They tend to multi -source and mix and match 
when possible. Moreover, the Notifying Party argues that important characteristics for 
customer choice in all product areas are: (i) the ability to supply the required product 
                                                 
225 […]  
 
62 features;  (ii) the ability to supply the required quantity; (iii) the ability to respond in 
case of defective products; and (iv) price competitiveness. Products will need to 
undergo customer qualification (or enabling) before they are sold. Finally, customers 
typically keep procurement these products to create the maximum am ount of 
competition and often have multi -vendor policies.  
As regards incentives  
(337) The Notifying Party argues that the Parties will not have the economic incentive to 
engage in an anti -competitive leveraging strategy.  
(338) According to the Notifying Party, the strategy to tie or bundle the Target Business’ 
NAND with SK hynix’ DRAM would in all likelihood reduce profits of the merged 
entity. 
(339) Moreover, the Notifying Party argues that anti -competitive leveraging strategies 
would only be profitable in the long term if this led to the effective exclusion of 
competition from the market where the bundled product is sold. On the basis of the 
market shares on the relevant markets, this development would not be plausible given 
that robust competitors are active in all product  areas that can offer similar bundles 
both in terms of price and range.  
(340) Finally, the Notifying Party argues that customers are sophisticated and powerful 
enough to favour multi -sourcing as well as mixing and matching over restrictive 
bundles.  
As regards ef fects 
(341) For the reasons set out above, the Notifying Party maintains that any potential anti -
competitive leveraging strategy would not have a material effect on competition. 
5.5.5. Commission’s assessment  
(342) For the reasons set out below, the Commission considers that  the Parties will not have 
the ability or incentive post -Transaction to engage in any conglomerate  foreclosure 
strategies . Moreover, any such strategy would likely not have any material effect on 
competition.  
As regards ability  
5.5.5.1. Assessment of potential market power 
(343) In order to have the ability to foreclose rivals, the merged entity must have a significant 
degree of market power in at least one of the markets concerned. That is, at least one 
of the Parties’ products must be viewed by many customers as particularly important, 
for example because of product differentiation, and there must be few relevant 
alternatives for that product.226 
                                                 
226  Non-Horizontal Merger Guidelines, paragraph 99.  
 
63 (344) In this res pect, the Commission notes first that, in general, the merged entity would 
not become the largest competitor on any of the markets concerned. Moreover, one or 
more competitors with larger or similar market shares remain active on each market.  
(A) The Target Business’ NAND and SK hynix’s  DRAM.  
(345) In the market for NAND flash memory, the Parties’ combined market  share for 2019 
amounted to [10-20] %. In the possible market for 3D NAND, the Parti es combined 
market share is [20-30]% (with the Target Business’ 3D  NAND products representing 
[10-20]% of the market). On both these markets, Samsung has a significant higher 
market share  (NAND: [30 -40]%; 3D NAND: [30-40]%), there is one other significant 
competitor with a comparable market position (Kioxia , NAND: [10 -20]%; 3D NAND: 
[10-20]%) and there are several smaller players in the market. 
(346) As regards the market for DRAM, SK Hynix holds a  worldwide  market share, for 
2019, of [20-30]%. On this market as well, Samsung is the strongest competitor with 
a significantly higher market share  ([40-50]%). Another competitor, Micron, has a 
similar market position as SK hynix ([20-30]%) while several smaller market players 
are also active on the market. Moreover, the Notifying Party submitted, and respondents to the Market Investigation confirm
227, that DRAM is a commoditized 
product. SK hynix’ s DRAM can therefore not be viewed as a product that is 
particularly important for many customers.  
(347) As a result, the Commission is of the view that, based on the Parties’ market positions 
in the markets for NAND (as well as 3D NAND) and DRAM, it is unlikely that the 
Parties will have the ability to leverage their pos ition in either of these markets.  
(B) The Target Business’ SSDs with SK hynix’s  managed NAND.  
(348) In managed NAND, SK hynix has a market share that remains below 20%. Samsung is by far the biggest competitor with a market share exceeding 50%. Therefore, the 
Commi ssion considers that SK hynix does not have a significant degree of market 
power in managed NAND.  
(349) On the overall market for SSDs, the combined market share of the Parties in 2019 
amounted to [10-20]% according  to Forward Insight, and to [20-30]% according to 
Omdia. The Target Business’ market share, according to Forward Insight, amounted 
to [10-20]%. While many competitors are active in the supply of SSDs, Samsung is 
the main competitor with a significant stronger market position than the Parties.  
(350) In cSSDs, the market share of the Parties is well below 15%. The Parties’ combined 
market share for 2019 is higher in the market for eSSDs however ([20-30]% accor ding 
to Forward Insight and [30-40]% according to Omdia) and even more so in the 
possible markets for SATA eSSDs ( [30-40]%) and PCIe eSSDs ([40-50]%). The 
Target Business in particular has a strong market position prior to the Transaction in 
eSSDs: [20-30]%; SATA eSSDs: [30-40]%; and PCIe eSSDs: [30-40]%). In each of 
these markets, Samsung is the most important competitor (eSSDs: [30-40]%; SATA 
eSSDs: [30-40]%; PCIe eSSDs: [30-40]%). However, in PCIe eSSDs  the merged 
entity would become the largest market player.  
                                                 
227  Replies to Questionnaire, question 105.1.  
 
64 (351) The results of the market i nvestigation confirm that Samsung is regarded as a very 
close compe titor to the Target Business  in the market for eSSDs . Overall, Micron and 
Kioxia are also considered to be  as close competitors.228 In PCIe eSSDs, only Samsung 
is regarded as a very close competitor. While not considered as very close competitors, 
Kioxia and  Micron are  not generally considered as distant competitors  either .229 In 
SATA eSSDs, both Samsung and Micron are regarded as very close competitors.230 
Moreover, all respondents to the market investigation who expressed an opinion 
confirmed that it is easy for customers to switch between SSDs231, that customers 
generally multi-source SSDs232 and that competitors of the Parties have a comparable 
financial strength233. The responses remain the same for eSSDs and possible  narrower  
markets  for SATa eSSDs and PCIe eSSDs . Finally, the majority of the respondents 
indicate that current and potential suppliers of eSSDs are expected to equally profit from market growth.
234 The Commission considers that, for these reasons, the Parties’ 
products cannot be considered as particularl y important to customers and that relevant 
alternatives exist.  
(C) The Target Business’ NAND and SSDs with SK hynix’s  CMOS image 
sensors.  
(352) The Commission considered above that the Target Business does likely not have a 
significant degree of market power in NAND  and SSDs. On a market for CMOS image 
sensors, SK hynix would hold a market share well below 10% while several 
competitors hold significantly stronger market positions. Therefore, the Commission 
considers that it is unlikely that the Parties will have the ability to leverage their 
position in either of these markets. 
5.5.5.2. Assessment of the pool of customers for the products concerned  
(353) In addition to market power, the Non-Horizontal Guidelines state that for foreclosure 
to be a potential concern, it must be the ca se that there is a large common pool of 
customers. This is more likely to be the case when the products are complementary.235 
(354) First, a s regards the Target Business’ NAND and SK hynix’s  DRAM, the Commission 
notes that both NAND and DRAM are SSD components. They might therefore both 
be purchased by SSD manufacturers and NAND and DRAM suppliers therefore share 
a common pool of customers. However, DRAM is used in many other applications 
such as personal and mobile devices (e.g. smartphones and wearable devices), 
consumer electronics and computing systems/equipment (servers, switches etc.). 
SSDs only take up a very small share in DRAM revenues. 
(355) Second, t he Parties do not share a large common pool of customers as regards t he 
Target Business’ SSDs with SK hynix’ s managed NAND. While SSDs are mainly 
used in enterprise storage systems (servers), PCs, tablets, gaming consoles etc., 
                                                 
228  Replies to Questionnaire, qu estion 50.  
229  Replies to Questionnaire, question 52.  
230  Replies to Questionnaire, question 54.  
231  Replies to Questionnaire, question 56.  
232  Replies to Questionnaire, question 57.  
233  Replies to Questionnaire, question 62.  
234  Replies to Questionnaire, questi on 64.  
235  Non-Horizontal Merger Guidelines, paragraph  100.  
 
65 managed NAND is mainly used in mobile phones. SSD and managed NAND 
customers do therefore typically not overlap. 
(356) Third, as regards t he Target  Business’ NAND and SSDs with SK hynix’ s CMOS 
image sensors , the Commission considers that CMOS image sensors are mainly used 
in different application areas than NAND. CMOS image sensors are mainly sold for smartphone applications. Therefore, there is not a large common pool of customers.  
(357) From the above, it follows that as customers do not tend to buy both products, the individual products are likely to be less affected by bundling or tying strategies.  
5.5.5.3. Assessment of counter-strategies  
(358) In its assessment of t he Parties’ ability to engage in anti -competitive leveraging 
strategies, the Commission further considers whether there are effective and timely counter-strategies that rival firms may deploy.
236 
(359) The results of the market investigation confirm that, for each of the potential bundles 
that are assessed, rival firms would be able to replicate the Parties’ bundles. In each 
instance, all respondents who expressed an opinion believe sufficient competitors would be able to do so.
237 
(360) The Commission further considers whether customers have a strong incentive to buy the range of products concerned from a single source rather than from many 
suppliers.
238 Where this is the case, customers are more likely to be affected by 
bundling or tying strategies.  
(361) The market investigation confirms, first, that several factors drive consumer choice in the data storage solutions industry to the same extent. Respondents indicate 
unanimously that these factors include: (i) the ability to supply required product 
features; (ii) the ability to supply required quantities; (iii) the ability to respond in case 
of defective products; and (iv) price competitiveness. Moreover, the majority of 
respondents agree that another important factor is the supplier’s ability to supply 
multiple products.
239 
(362) All resp ondents who expressed an opinion further confirm that customers prefer to 
multi-source different products rather than to rely on a single supplier.240 One 
respondent states: “ Customers prefer to multi source in order to secure assurance of 
supply during thos e times when supply is constrained.”241 Furthermore, the majority 
of respondents also confirm that the bundled sale of NAND and DRAM, SSDs and managed NAND, and NAND/SSDs and CMOS image sensors is uncommon.
242 
(363) In view of the above, the Commission considers tha t rival firms are able to deploy 
effective and timely counter-strategies in case of a potential bundling or tying strategy 
                                                 
236  Non-Horizontal Merger Guidelines, paragraph 103.  
237  Replies to Questionnaire, questions 127, 133 and 139.  
238  Non-Horizontal Merger Guidelines, paragraph 104.  
239  Replies to Questionnaire, questio n 118.  
240  Replies to Questionnaire, question 119.  
241  Replies to Questionnaire, question 119.1.  
242  Replies to Questionnaire, question 121.  
 
66 from the Parties. Moreover, customers are not likely to be affected by any bundling or 
tying strategies.  
(364) Overall, the results of the market investigation confirm that the majority of the 
respondents that the Parties do not have the ability to engage in a contractual tying 
strategy whereby the purchase of a tied good is imposed when a customers to purchase 
a tied good.243 Finally, the majo rity of the respondents consider that the Parties will 
not have the ability to engage in mixed bundling by incentivising the joint purchase of the merged entity’s products by offering higher prices for mix-and-match solutions 
involving only one of its products as compared to the potential bundles set out above.  
(365) For these reasons, the Commission considers that the Parties will not have the ability 
post-Transaction to engage in any anti -competitive leveraging strategies.  
As regards incentives  
(366) The Commission has also assessed whether the merged entity will have an incentive 
to engage in either contractual tying or mixed bundling strategies for the products 
discussed above, in order to foreclose rivals from effectively competing for customers.  
(367) First, a s set out above, the merged entity will continue to face several credible 
competitors, many of which are able to offer the same range of products as the 
Parties.
244 
(368) Second, a s regards potential bundles of the Target Business’ SSDs with SK hynix’s  
managed NAND and the Target Business’ NAND and SSDs with SK hynix’s  CMOS 
image sensors, the Commission considered above that these products are mainly used 
in different application areas and that customers do not tend to buy both products in 
these potential bundles. For this s ame reason, the Commission considers that the 
Parties will not have an incentive to engage in an anti -competitive leveraging strategy 
in relation to these products. This is confirmed by the results of the market 
investigation, where the majority of the res pondents indicate d in relation to these 
bundles that the Parties would not have an  incentive to engage in either a contractual 
tying or a mixed bundling strategy.245 
(369) Third, as  regards a potential bundle consisting of the Target Business’ NAND and SK 
hynix’s  DRAM, the Commission considers that pure bundling and tying may entail 
losses for the Parties246 as the market investigation confirmed that a significant number 
of customers are not interested in buying bundles.247 Moreover, the Commission 
considered already a bove that the Parties lack significant market power and several 
competitors with considerable market power remain on each market which are able to 
replicate this bundle248. Possible bundled sales by the merged entity would therefore 
unlikely lead to the marginalisation of competitors. In line with these findings, the 
majority of the respondents to the market investigation indicate that, in their view, the 
                                                 
243  Replies to Questionnaire, questions 123, 129 and 135.  
244  Replies to Questionnaire, questions 127, 133 and 139.  
245  Replies to Questionnaire, questions 130, 132, 136 and 138.  
246  Non-Horizontal Merger Guidelines, paragraph 106.  
247  Replies to Questionnaire, questions 119 and 121.  
248  Replies to Questionnaire, question 127.  
 
67 Parties do not have the incentive to engage in either a contractual tying or a mixed 
bundling strategy concerning the Target Business’ NAND and SK hynix’s  DRAM.  
(370) Based on the above, the Commission considers that the merged entity is unlikely to 
have the incentive post -Transaction to engage in any anti -competitive leveraging 
strategies.  
As regards effects  
(371) Rega rdless of whether the merged entity has either the ability or the incentive to 
foreclose rivals on any of the markets that are part of the potential bundles that are assessed, the Commission considers that such strategy would not have an appreciable 
impact  on competition.  
(372) It is only when a sufficiently large fraction of market output is affected by foreclosure 
resulting from the concentration that the concentration may significantly impede 
effective competition. If there remain effective single -product players in either market, 
competition is unlikely to deteriorate following a conglomerate concentration.
249 The 
Non-Horizontal Merger Guidelines set out further that the effect on competition needs 
to be assessed in light of countervailing factors such as the presence of countervailing 
buyer power or the likelihood that entry would maintain effective competition in the 
closely related markets concerned.250 
(373) As set out above, there are several significant players remaining on each of the markets concerned. Moreover, any potential contractual tying or mixed bundling strategy would be mitigated by the ability of these competitors to react to such strategy by 
replicating these bundles.
251 
(374) The results of the market investigation confirm the limited effect of the Transaction. 
All respondents to the market investigation who expressed an opinion indicate that the 
impact of the Transaction on their company would be either positive or neutral.252  
(375) As regards potential bundles of the Target Business’ SSDs with SK hynix’s  managed 
NAND and the Target Business’ NAND and SSDs with SK hynix’ s CMOS image 
sensors, the Commission considered above that these products are mainly used in 
different application areas and that customers do not tend to buy both products in these 
potential bundles. Any potential contractual tying or bundling strategy would therefore 
not have an appreciable impact on competition. 
(376) As regards a potential bundle consisting of the Target Business’ NAND and SK 
hynix’s  DRAM, the market investigation confirms that the Transa ction will not have 
an appreciable impact on competition. All respondents to the market investigation who expressed an opinion indicate that the impact of the Transaction on a market for 
DRAM will be neutral.
253 Moreover, all respondents to the market invest igation who 
                                                 
249  Non-Horizontal Merger Guidelines, paragraph  113.  
250  Non-Horizontal Merger Guidelines, paragraph  114.  
251  Replies to Questionnaire, questions 127, 133 and 139.  
252  Replies to Questionnaire, question 141.  
253  Replies to Questionnaire, question 142.  
 
68 expressed an opinion indicate that the impact of the Transaction will be either positive 
or neutral on the markets for NAND and 3D NAND.254 
(377) In light of the above, the Commission considers that any anti -competitive leveraging 
strategy would not ha ve an appreciable impact on competition. 
5.5.5.4. Conclusion  
(378) For the reasons set out above, the Commission considers that the Parties will not have 
the ability or incentive post -Transaction to engage in any conglomerate  strategies. 
Moreover, any such strategy would  likely not have any material effect on competition. 
As a result, the Commission considers that the Transaction will significantly impact 
effective competition on any market.  
6. CONCLUSION  
(379) For the above reasons, the European Commission has decided not to oppo se the 
notified operation and to declare it compatible with the internal market and with the 
EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement.  
For the Commission  
  
(Signed)  
Margrethe VESTAGER  
Executive Vice -President  
                                                 
254  Replies to Questionnaire, question 142.