As reported by multiple Japanese media, including Kyodo News, Nikkei, and Asahi Shimbun on the 13th and 14th of this month, negotiations for the merger between NAND flash memory giants Kioxia and Western Digital have reportedly reached the final stages. There is a high likelihood that a merger agreement will be reached within this month, and the newly merged company is expected to be listed on the NASDAQ in the United States. Additionally, the board of the new company will be predominantly controlled by Kioxia.

The primary objective of this business merger is to prepare for the uncertain conditions in the storage market. By expanding their scale and positioning for future investment competition, they aim to fortify their competitive edge.

Specifics of the Agreement are Still under Review

According to the reports, Kioxia and Western Digital will establish a holding company, KIOXIA Holdings. Western Digital’s storage business and Kioxia will be incorporated under this holding company, focusing on the research and production of NAND Flash. It’s worth noting that Western Digital’s hard drive business will remain an independent entity and will not be part of this transaction.

In terms of the merger’s enterprise value-based breakdown, Kioxia will hold 63%, and Western Digital will hold 37%. However, after considering capital adjustments, the final investment ratio in the holding company will be 50.1% for Western Digital shareholders and 49.9% for Kioxia shareholders.

Toshiba, which currently holds around 40% of Kioxia, will also become a shareholder in the holding company. The President of Kioxia, Nobuo Hayasaka, will assume the role of President of the holding company. Furthermore, the majority of seats on the board will be under Kioxia’s control, granting Kioxia substantial operational authority.

Factors and Potential Roadblocks in Kioxia and Western Digital Merger

Previously, it was reported that the headquarters of the holding company would be located in Japan. However, in order to facilitate fundraising for equipment investments, they plan to be listed on the NASDAQ in the United States. Furthermore, there are future plans for a listing on the Tokyo Stock Exchange. When Kioxia and Western Digital merge, Japan’s three major banks, including Mitsubishi UFJ, and the Japan Policy Investment Bank are considering providing financing in the range of 1.5 to 1.9 trillion Japanese yen.

However, the reality of this merger presents challenges, as influential industry competitors may potentially interfere. The finalized agreement will be subject to antitrust reviews in various countries, and the outcome of scrutiny by Chinese antitrust authorities remains uncertain.

According to data from TrendForce, in the Q2 of 2023, in the NAND memory market, Samsung leads with a market share of 31.1%, while Kioxia holds 19.6% and Western Digital maintains a 14.7% market share. Following the merger of Kioxia and Western Digital, their combined market share may exceed 34.3%, positioning them as the dominant force in the NAND memory market.

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As reported by CNA on October 16th, Market speculations rise as NVIDIA CEO Jensen Huang’s visit to Taiwan for Foxconn Technology Day draws attention. Industry sources suggest potential collaborations in server and electric vehicle sectors.

Jensen Huang is set to visit Taiwan for Foxconn Technology Day, continuing discussions about possible partnerships between the tech giants. Industry experts have noted that the collaboration between NVIDIA and Foxconn extends primarily into the server sector, but there may also be untapped collaboration opportunities in the electric vehicle domain.

The market has been abuzz with speculation about Jensen Huang’s visit, following his visit to Taiwan in May. It is anticipated that he will participate in Foxconn Technology Day scheduled for October 18. Foxconn, the world’s largest contract electronics manufacturer, has remained tight-lipped about Huang’s visit. Nevertheless, the NVIDIA CEO has already arrived in Taiwan and was seen enjoying the local night markets, happily taking photos with fans.

Regarding Jensen Huang’s visit and the possible partnership with Foxconn, Dr. Arisa Liu , Research Fellow and Director of the Industrial Economic Information Database at Taiwan Institute of Economic Research (TIER), pointed out that while the primary focus of the collaboration between NVIDIA and Foxconn lies in the server sector, Foxconn is aggressively expanding its electric vehicle (EV) ventures, creating space for potential cooperation between the two tech giants in the EV field.

Dr. Liu emphasized that the recent negative press regarding artificial intelligence (AI) has raised concerns about the future growth prospects of AI. Additionally, NVIDIA is currently under investigation by the European Union for antitrust issues. Thus, Huang’s visit will be closely observed to determine whether it can help bolster the momentum in the supply chain.

The partnership between Foxconn and NVIDIA dates back to several years, with Jensen Huang holding a private meeting with Foxconn Chairman Young Liu during his visit to Taiwan in May. Last year, Foxconn’s subsidiary, Industrial Internet (IIoT) company Foxconn Industrial Internet (FII), announced the adoption of NVIDIA’s Grace CPU system for high-performance data centers and edge computing applications. FII introduced server systems powered by NVIDIA’s Grace CPU superchip, catering to the growing demand for efficient data centers.

In January of this year, Foxconn and NVIDIA announced a strategic partnership to collaborate on automotive and autonomous driving platforms. As part of the agreement, Foxconn became NVIDIA’s first-tier manufacturer, responsible for producing electronic control units (ECUs) based on NVIDIA’s DRIVE Orin system-on-a-chip (SoC) design for the global automotive market.

The tech industry will be closely monitoring Jensen Huang’s visit to Taiwan and the Foxconn Technology Day event for further insights into the evolving collaborations and strategic directions between Foxconn and NVIDIA.

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(Image: NVIDIA)

Micron has announced a significant expansion in Penang, Malaysia on October 13th. Micron had previously invested $1 billion in Penang and plans to invest another $1 billion over the coming years for the construction and equipping of a state-of-the-art assembly and testing facility. This expansion is located in Batu Kawan Industrial Park (BKIP), will increase the total factory area to 1.5 million square feet.

The expansion positions Micron Malaysia to boost production and further enhance its assembly and testing capabilities, allowing it to meet the growing demand for transformative technologies like NAND, PC DRAM, and SSD modules driven by artificial intelligence, autonomous vehicles, and electric cars.

“This expansion also reflects our unwavering dedication to advancing semiconductor development and manufacturing excellence,” Micron Malaysia vice-president and country manager Amarjit Singh Sandhu addressed, “The official opening of our new manufacturing facility in Batu Kawan also strengthens Micron’s global manufacturing footprint, enabling us to deliver quality products to our customers on time, with reduced cycle time and at scale.”

Malaysia’s Semiconductor Potential

Malaysia stands out for its strong education standards and shares the British legal system with just Singapore in ASEAN, making it a competitive choice for companies. The language proficiency of Malaysians in English, Mandarin, and Malay enables smooth global communication. Besides, Malaysia’s two top-tier ports, Port Klang and Port of Tanjung Pelepas, enhance its global accessibility.

Penang is a semiconductor hub, often likened to the “Silicon Valley of the East,” with a focus on electronics, computers, and mobile phone chips. The growing demand for automotive chips and green energy technologies has attracted numerous companies, leading to facility expansions. Major players like Intel, Texas Instruments, Infineon, Bosch Group, and ASE Technology Holding have invested billions in Malaysia’s semiconductor industry, marking it as a growing center for backend testing and packaging.

Current State of Malaysia’s Semiconductor Industry

Apart from Micron, which opened their second plant in Penang last weekend, Malaysia has already attracted significant attention to establish wafer fabrication plants in the United States and other regions.

In the past two years, Intel invested $6.46 billion in advanced packaging capabilities in Penang and Kedah. Texas Instruments embarked on building semiconductor testing and packaging plants in Kuala Lumpur and Malacca, with a $2.7 billion investment. Infineon allocated $5.45 billion for expanding facilities and entering the electric vehicle sector, while Bosch Group is investing $358 million to fortify its semiconductor supply chain in Penang. ASE Technology Holding also initiated the construction of a new testing facility in Penang.

The surge of semiconductor giants underscores Malaysia’s pivotal role in the industry. This transformation aligns with the unique production strengths of Southeast Asian nations, reshaping supply chains and redefining production centers—a focus and challenge for global companies.

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TSMC Founder Morris Chang, speaking at a press conference following the TSMC sports event on the 14th, noted that countries around the world are currently building their semiconductor supply chains. In his view, Japan is a more ideal location for this, given the evolving economic landscape, Taiwan’s semiconductor manufacturing environment might lose its advantages in about 20 to 30 years.

According to a report by Taiwanese media TechNews, discussing TSMC’s global presence, Chang mentioned that about 27 to 28 years ago, it was his dream to build a TSMC fab in the United States, and at that time, establishing WaferTech was a beautiful dream. However, this dream turned into a nightmare after 2 to 3 years due to various cultural factors. But he also believes that today’s TSMC is vastly different from the company of a couple of decades ago. Whether it’s talent or technology, it has improved significantly. With proper preparation, perhaps the past dream can be realized.

Now, countries worldwide are establishing their semiconductor supply chains. So which countries have a better chance of success? Chang believes, based on past experiences, that Japan and Singapore are more ideal places. However, Singapore has limited resources, making Japan the more favorable option. Additionally, the Kyushu region in Japan offers abundant resources such as land, water, and electricity, along with a strong work culture.

Looking at TSMC’s overseas expansion, in 2020, TSMC announced its investment to build a factory in Arizona, USA, with plans to establish 4-nanometer process capabilities. Construction on the Arizona plant began in June 2021, and a groundbreaking ceremony was held in December of the same year. However, due to construction delays, the actual start of production is expected to be pushed back from the original target of late 2024 to 2025.

In comparison, TSMC’s Kumamoto fab has commenced equipment installation, and its facility progress seems to be ahead of the new plant in Arizona. In addition to their Kumamoto Fab 1, TSMC had previously indicated its consideration of building a second factory in Japan, likely to be situated near the first one.

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(Photo credit: TSMC)

According to UDN News, Taiwan’s semiconductor foundry, Powerchip Semiconductor Manufacturing Corporation (PSMC), is planning to establish a 12-inch wafer plant in Japan, with Mie Prefecture emerging as a probable location. This facility will be part of a burgeoning semiconductor hub that links up with the thriving industrial city of Nagoya and UMC’s Japanese plant, pending the approval of Japanese government subsidies. PSMC would be the second Taiwanese semiconductor giant to set up shop in Japan after this move, expanding its global presence.

PSMC has yet to officially comment on its investment in Japan or the specific site for the plant. Market observers note that PSMC’s Chairman, Frank Huang, has a track record of close collaboration with Japanese firms. From early partnerships with Elpida in producing DRAM to later contract manufacturing of ICs for Renesas, PSMC’s order books are expected to be promising in Japan.

In July of this year, PSMC announced a partnership with the Japanese financial group SBI Holdings to establish a 12-inch wafer foundry within Japan and seek official Japanese subsidies.

PSMC envisions that the Japanese foundry will utilize 22/28-nanometer manufacturing processes and incorporate advanced Wafer on Wafer stacking technology to meet the demands of the AI market. Recent reports suggest that the Japanese government has granted substantial subsidies, around 140 billion yen, for the PSMC-SBI collaboration in Japan, although PSMC refrains from commenting on this matter.

Recent reports indicate that the location of PSMC’s new facility in collaboration with SBI is likely to be in Mie Prefecture. This choice is supported by two key factors. Firstly, it’s in close proximity to the bustling industrial hub of Nagoya, offering logistical advantages for both raw materials and wafer exports. Additionally, UMC acquired Fujitsu’s 12-inch wafer plant in Kuwana City, Mie Prefecture, showcasing regional wafer expertise. This choice benefits from the industrial cluster, streamlining recruitment and material logistics for construction and production.

It is understood that PSMC’s collaboration with SBI to establish a plant in Japan will follow a similar joint-venture mode like Nexchip Semiconductor Corporation in China several years ago. PSMC will provide its expertise in constructing the plants and managing the production lines. Once everything is up and running smoothly, they will gradually reduce their involvement and may adopt a shareholding model for the Japanese wafer plant.

(Image: PSMC)