Intel’s stock rose approximately 4% on Wednesday amid reports that the company is engaged in discussions with South Korean memory chip manufacturer SK Hynix about producing chips in the United States. The potential agreement aligns with efforts to increase domestic semiconductor manufacturing, a key priority for the U.S. government.

According to reports, the negotiations could involve SK Hynix leasing Intel’s planned semiconductor fabrication facility in Ohio. The plant, which Intel has been developing to expand U.S.-based chip production, would offer SK Hynix a strategic opportunity to strengthen its manufacturing presence outside South Korea. Another possibility under consideration is the creation of a joint venture that might include major cloud computing companies aiming to secure a stable supply of memory chips amid ongoing global semiconductor shortages.

However, the potential transaction faces challenges beyond business considerations. The South Korean government has indicated concerns regarding any agreement that might affect the country’s domestic chip industry or its broader technological competitiveness, suggesting possible opposition to the deal.

Intel has not publicly confirmed the specifics of the discussions, nor have SK Hynix or South Korean officials provided detailed statements about the talks. Nonetheless, the prospect of deepening collaboration between the two companies could represent a notable development in the global semiconductor landscape, especially as governments worldwide seek to bolster local supply chains for critical technology components.

This development follows increasing U.S. legislative and executive efforts to encourage chip manufacturing on American soil, driven by supply chain vulnerabilities exposed during recent geopolitical tensions and the COVID-19 pandemic. If realized, the partnership could enhance Intel’s manufacturing capacity while providing SK Hynix with new avenues for growth amid a competitive global market.