The sale of hard drives has fallen dramatically due to the arrival of SSDs, which are faster and more efficient. But, at present, there has also been a sharp drop in the sale of SSDs. Due to this scenario, the manufacturer Kioxia is close to being absorbed by Western Digital (WD).
First, we must highlight that Kioxia is the former SSD division of Toshiba. The Japanese company created this independent division that has not yet taken off. Competing against giants like Samsung, Western Digital, Kingston or Crucial, among others, is almost impossible.
Toshiba Memory (SSD division) was sold to Bain Capital in 2018 for $18 billion. Later, it was renamed for differentiation from the original company. Initially it was thought of launching an initial public offering due to the drop in SSD sales. Toshiba maintains a 40.6% ownership of Kioxia.
A merger that is only a matter of time
A few months ago it was already mentioned that Western Digital was working on the acquisition of Kioxia to strengthen your solid state solutions. Both parties consider that this process will mean an improvement in connectivity. Above all, they better seek their position against Samsung, who is the largest manufacturer and seller of solid units in the market.
This unification process between Western Digital and Kioxia could lead to the birth of a new company. Apparently, Kioxia wants to have the 43% of the new company and Western Digital he would stay 37% The remaining 20% would be owned by the rest of the shareholders of both companies.
Both companies are in the conversation phase and no final decisions. It stands out from different sources, who are working on this process and changes could be made. Everything indicates that the great discrepancies are in economics, not in the very need for this process.
The “easy” part is the agreement between the two parties. We must bear in mind that this process will later become reviewed by the different antitrust organizations. So the agreement, among others, will have to be validated by China and the United States.
It should be noted that the first talks between WD and Kioxia began in 2021, but they reached a dead end. Above all, the process was paralyzed due to discrepancies in the valuation. Faced with the deterioration of the market, this year they have resumed talks for the sale.
A fairly similar recent precedent
A process similar to this has recently taken place, but with other actors. It was at the end of 2021 when we finally learned of the disappearance of Intel’s SSD division. SK Hynix acquired this division from Intel in December 2021 for a total of $7 billion.
The process has ended up generating the appearance of Solidigm, which is a subsidiary of SK Hynix. Intel thus gets rid of a loss-making division completely and that has not contributed much.
Looked at from our perspective, from the user, the offer is reduced and that is not usually positive. Remember that in the past Samsung, SK Hynix and Micron, the main memory manufacturers, have been accused of agreeing on prices. It was never proven, as it was never fully investigated. China said to launch an investigation in this regard that was never heard from again.
