[News] Kioxia and Western Digital Restart Merger Plan, SK Hynix Reportedly Remains Opposition

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According to industry sources cited in a report from Business Korea, Japanese NAND Flash supplier Kioxia is preparing to restart its merger plan with its partner Western Digital (WD). However, SK Hynix, a major shareholder and Korean memory giant, continues to firmly oppose the merger.

The same report citing industry sources also indicates that Kioxia could potentially go public on the Tokyo Stock Exchange as early as October 2024, according to its schedule. Kioxia’s major shareholder, Bain Capital, a U.S. private equity firm, has engaged its creditor banks to review the listing process, with the banks providing over JPY 1 trillion in loans to support this effort.

Despite facing losses of JPY 254 billion from the second to fourth quarters of 2023 and the impending repayment of a JPY 900 billion loan in June 2024, Kioxia has seen improved market conditions in the memory market, leading to higher market quotations and increased revenue to address these financial challenges. This resurgence has prompted Kioxia to restart its merger plans with WD, with the backing of creditor banks supporting this initiative.

However, SK Hynix, which indirectly holds a 15% stake in Kioxia through a KRW 4 trillion investment in Bain Capital, has explicitly stated its opposition to restarting the merger between Kioxia and Western Digital. A representative from SK Hynix cited by the report from Business Korea stated that their position against the merger of Kioxia and WD remains unchanged. However, they are open to discussing potential cooperation under conditions that protect their investment interests.

In 2023, Kioxia and Western Digital had drafted a merger agreement that was blocked due to opposition from SK Hynix. The same report, citing industry sources, suggests that SK Hynix is expected to continue opposing the merger of the two companies. SK Hynix intends to leverage its advantages in the normalization of the NAND Flash market to maximize the gap in market conditions between itself and Kioxia/ WD as much as possible.

For the NAND Flash market, TrendForce’s report in march has indicated that, as of the fourth quarter of 2023, SK Group captures the global market with a share of 21.6%, followed by WD (14.5%) and Kioxia (12.6%).

Read more

• [News] SK Hynix Rumored to Propose Collaboration with Kioxia for HBM Production in Japan
• NAND Flash Industry Revenue Grows 24.5% in Q4 2023, Expected to Increase Another 20% in Q1, Says TrendForce

(Photo credit: Western Digital)