The price of SSDs has been plummeting, until they are cheap solutions with great performance. Currently, it is unthinkable (practically) to find a laptop or desktop computer with an HDD. Well, now manufacturers of mechanical hard drives and SSDs, Western Digital and Kioxia are considering a merger without precedents.
You are no doubt familiar with Western Digital or WD (how the company likes to call itself these days) as they have been making HDDs for decades. Kioxia may not sound like much to you, but it is Toshiba’s rebranded for its storage unit section. Both would be in conversion for a possible merger and strengthening.
A market, that of storage, unsustainable
Currently, the Xbox Series X and PS5 have already banished mechanical hard drives and have Bet on SSDs. It is increasingly difficult to find an HDD in a laptop and in desktops they are as a secondary storage solution. A complicated situation that is pushing hard drive manufacturers.
Western Digital and KioxiaGiven the incessant decline in HDD sales and the bad moment in the SSD segment, they consider a merger. Both companies have lost much of the HDD sales in favor of SSDs. But it is also that the SSD segment is extremely competitive with an infinite number of solutions.
According to rumors, Western Digital and Kioxia they are already in talks for a merger. The information suggests that it could reach a agreement before September of this year about 20 billion dollars.
Kioxia, As we have commented, it is nothing more than the Toshiba storage business division. Western Digitalfor its part, is specialized in HDD and SSDIn addition, if there acquired SanDisk some years ago. This would mean a large conglomerate that we do not know how it would end up structuring.
This merger can be positive, since we will enter an interesting terrain. The resulting new company will have a huge intellectual property and patent base. In addition, they will have a production capacity of 3D NAND Flash memoriesas well as HDD manufacturing.
To give you an idea, the collaboration between Kioxia and WD goes back a long way. These two companies already share the owned two factories in Japan for the manufacture of memory chips for SSD and that exceed other manufacturers in production capacity.
Without a doubt, the big problem is the antitrust regulators.
We have recently seen how NVIDIA has been prevented from acquiring ARM by international antitrust regulators. They are international organizations from the United States, the United Kingdom, Japan, China and the European Union that ensure that mergers are avoided that could alter the market in favor of a single company.
The agreement between Kioxia and WD will have to be scrutinized by these regulators and analyze how it will affect competition in this market. If the agreement is closed, they would control a little more than a third of the supply of memories for SSDs and of the manufacture of HDDs.
It should be noted that SK Hynix recently acquired Intel’s 3D NAND memory and SSD division. Regulators did not object, as Intel’s strength in this market was very low. But, in this case we are talking about a very important earthquake, which should make the cut, at least in theory.
