Western Digital in talks to merge with Japanese chip-maker Kioxia

FILE PHOTO: A Western Digital office building is shown in Irvine, California, U.S., January 24, 2017. REUTERS/Mike Blake/File Photo

U.S.-based Western Digital Corp is in advanced talks for a potential $20 billion stock merger with Japanese chipmaker and partner Kioxia Holdings Corp, a person familiar with the matter told Reuters.

The companies could reach an agreement as early as mid-September, and Western Digital Chief Executive Officer David Goeckeler would run the combined firm, the source said, who requested anonymity to discuss confidential matters.

The Wall Street Journal reported the talks earlier on Wednesday. The news sent San Jose, California-based Western Digital’s shares up as much as 15% on Wednesday and they closed up 7.8%.

A potential combination of the two – the second- and third-largest NAND flash memory chipmakers – would have market share equal to leader Samsung Electronics Co Ltd, according to market research firm TrendForce.

Kioxia, sold by Toshiba Corp in 2018 to private equity firms as Toshiba Memory Corp, shelved plans last year for what would have been Japan’s largest initial public offering in 2020. In June, however, financial magazine Diamond said Kioxia was planning an IPO as early as September.

An IPO is still a possibility should Kioxia fail to reach a deal with Western Digital, the source said.

Toshiba still owns about 40.6% of Kioxia, according to its 2020 annual report. Toshiba’s shares were flat on Thursday in early trade.

Kioxia told Reuters it does not comment on market rumours or speculation. It said it was considering appropriate timing for an IPO.

Western Digital did not immediately respond to requests for comment.

In Japan, the two companies jointly produce NAND chips, which don’t need power to retain data and are used in smartphones, TVs, servers and public announcement display panels.

Chipmakers have seen robust demand driven by new smartphone model launches, 5G expansion and a pandemic-fuelled rise in work from home.

While Samsung dominates with over a third of the NAND market, TrendForce said, Kioxia has a nearly 19% share and Western Digital 15%. South Korea’s SK Hynix Inc and U.S. players Micron Technology Inc and Intel Corp are the other large players.

A Western Digital-Kioxia merger would further consolidate the industry after Hynix agreed to buy Intel’s NAND business for $9 billion last year, a deal that is awaiting anti-trust clearance.

The global chip industry has been rationalising due to the pressures of shortages and trade disputes between Washington and Beijing, triggering supply chain woes for makers of cars and laptops to home appliances and smartphones.

(Reporting by Eva Mathews in Bengaluru and Krystal Hu in New York, and Makiko Yamazaki in Toky; Editing by Stephen Coates, Sayantani Ghosh and Tom Hogue)

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.