Kioxia and Western Digital are moving quickly in their merger negotiations. So much so that, according to Reuters, they are already finalizing the details of the operation agreement. Today, Kioxia is the second largest NAND memory manufacturer in the world, and Western Digital the fourth. Therefore, if the merger agreement goes through, the company resulting from the operation would be the largest provider of flash memory in the world.
43% of the new company will be owned by Kioxia, while another 37% will remain in the hands of Western Digital. The remaining 20% will remain in the hands of the current owners of the two companies. Among them would be Toshiba, which currently has 40.6% of Kioxia’s titles. The merger of this with Western Digital, therefore, would make it a shareholder with a lot of weight in the new entity.
Although Kioxia and Western Digital are dedicated in both cases to the production of NAND memory, their business strategy is different. Kioxia sells memory, while Western Digital sells mostly NAND memory products, including various models of SSD storage drives.
According to several analysts, both have been in a more vulnerable position than their main competitors due to the volatility of the NAND flash memory market. These are Samsung and SK Hynix, which themselves are two of the major players in the much more established DRAM chip sector.
Kioxiaformerly Toshiba’s memory division, is owned since 2018 by a group of investors led by Bain Capital. This group bought Toshiba Memory from Toshiba, and planned to take the company public, but the deterioration of the flash memory market has delayed these plans. Its sale to Western Digital, which co-develops various process technologies with Kioxia, and even operates factories with it, is a way for investors to get their money back, in the midst of a market complicated by falling prices for NAND memory. .
It is not the first time that Kioxia and Western Digital have tried to merge. There were already several in 2021, which failed for various reasons, such as the difference in the valuation of the companies. But this has not been an obstacle for negotiations on a merger to be reborn last January. Of course, a final decision has not yet been made, and the details of the operation may change.
