Intel ( INTC Quick Quote INTC - Free Report) recently announced that it is selling its NAND memory and storage operations to South Korea-based SK hynix for $9 billion. The sale includes Intel’s NAND component and wafer business, NAND solid state drives (SSD) business but excludes the chipmaker’s Optane modules business operations. The deal also includes Intel’s Dalian NAND memory manufacturing facility located in China The NAND business forms a part of Intel’s Non-Volatile memory solutions group (NSG) and added $2.8 billion to the segment’s top line for the six months ended Jun 27, 2020. The operating income contribution to the segment from the NAND business for the same period was $600 million. Selling of non-core operations will help Intel focus on its primary CPU memory chips business. Intel is planning to utilize the proceeds from the sale to augment its business prospects in the fast-emerging markets of 5G networking, Artificial Intelligence (AI), and autonomous edge computing verticals. We expect management to divulge more details about the NAND business sale when it reports third-quarter 2020 earnings on Oct 22. Takeover Details The sale will conclude in a two-tier process. In the first stage, post the regulatory and government approval in late 2021, SK hynix will pay $7 billion and take over NAND SSD business (entire IP suite and all employees) and Dalian facility. Per the agreement, the last closing is slated for March 2025 wherein SK hynix will pay $2 billion and take over the remaining businesses that includes Dalian fab workforce, IP pertaining to manufacture and design of NAND flash wafers, and the absorption of R&D employees. Meanwhile, Intel will keep control of IP related to the manufacture and design of NAND flash wafers while continuing production of NAND wafers at the Dalian Memory Manufacturing Facility. SK hynix is a well-known manufacturer of semiconductors chips like flash memory chips ("NAND flash"), CMOS Image Sensors ("CIS") and Dynamic Random Access Memory chips ("DRAM"). The acquisition of Intel’s NAND business will help SK hynix to expand presence in the flash memory market. Markedly, NAND flash memory market is primarily dominated by Samsung Electronics. Per Statista report, Samsung was the market leader with 31.4% share, while Intel and SK hynix held 11.5% and 11.7% market share, respectively, in the second quarter of 2020. Growth Prospects in Lucrative AI and Edge Markets Bode Well Intel’s latest move of divesting NAND business highlights its intention to move away from less lucrative areas and focus on other prospective business areas like the Data Center Group (DCG). Meanwhile, Intel’s CEO, Bob Swan, continues to strengthen Intel’s data-centric business and his stringent stance on finances is worth mentioning. In fact, the company is committed toward exploring opportunities for its cloud and comms division, which is part of DCG. In April 2020, the chipmaker divested its Home Gateway Platform Division — a unit engaged in manufacturing chips used in home internet access gear that enable wireless connection — to MaxLinear. Intel is focusing on the development of advanced processors with embedded AI and IoT capabilities to capitalise on the growing opportunities that these lucrative technologies offer. Per Verified Market Research data, global IoT market is anticipated to witness a CAGR of 25.7% over a forecast period of 2019 to 2026 and reach $1,319.08 billion by 2026. Meanwhile, Grand View Research report projects global AI market to witness a CAGR of 42.2% between 2020 and 2027. Notably, Intel has unveiled third-generation Xeon Scalable Cooper Lake processor which enhances AI throughput by lowering the amount of data consumed for the same accuracy. The semiconductor giant also introduced two new processors — Intel Atom x6000E Series, and Intel Pentium and Intel Celeron N and J Series processors — that specifically have improved IoT capabilities to accelerate edge computing. These processors belong to Intel’s 11th generation core processor series dubbed “Tiger Lake.” Now, edge computing technology refers to the processing and storage of the data closer to the edge of a user’s network, wherein the data is generated and not across a centralized data center. Notably, accelerated deployment of 5G, migration of workloads to cloud and fast proliferation of IoT & AI is facilitating data processing at the edge. Global edge computing market is envisioned to reach $250.6 billion by 2024 at a CAGR of 12.5% between 2019 and 2024, per an IDC report. Intel’s push into the fast growing markets of edge, AI, cloud, Internet of Things (IoT), and 5G networking hold promise in the longer haul and reinforce its competitive position against peers like Advanced Micro Devices ( AMD Quick Quote AMD - Free Report) . However, NVIDIA's ( NVDA Quick Quote NVDA - Free Report) acquisition of ARM Holdings will likely help the acquirer to provide full stack CPU-GPU offering, which poses a concern for Intel. Also, delay in launch of chips based on 7 nanometer (nm) process is another headwind for Intel. Zacks Rank and Other Key Pick At present, Intel carries a Zacks Rank #2 (Buy). Another top-ranked stock worth considering in the broader sector is Zoom Video ( ZM Quick Quote ZM - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Long-term earnings growth rate for Zoom Video is pegged at 25%. 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