The negotiations between Western Digital and Kioxia for their merger have ended abruptly, when everything seemed like they were not far from ending satisfactorily. Apparently, the breakup has been mainly due, according to Nikkei, to the fact that SK Hynixan indirect investor in Kioxia with considerable weight, has not given its approval to the operation.
However, it is not the only obstacle that has caused the talks between the representatives of both companies to fail. There have also been some disagreements over the main terms of the agreement with Kioxia’s main shareholder, Bain Capital.
Currently, Western Digital and Kioxia are respectively the second and fourth largest manufacturers in the NAND flash memory industry. With their agreement they would have brought together their manufacturing operations for this type of memory into a single company, which would result after their merger in the best NAND memory manufacturer in the world. This would improve its situation in terms of competitiveness, and also its profitability.
The merger was seen as an attack on Samsung Electronics’ dominant position in the market, taking advantage of the combined resources and capabilities of the two companies. Also an attempt to eliminate competition between the two, which already have factories open jointly, and various collaboration projects in the development of NAND flash memory.
But the world’s third largest NAND flash memory manufacturer, SK Hynix, does not agree with the operation, and has always been adamantly opposed to it. SK Hynix has a market share, and has also invested about $2,667 million in a group led by Bain Capital that bought Kioxia in 2018.
SK Hynix has expressed concern that the proposed merger would negatively impact the company’s position in the market. Furthermore, it would also affect the collaboration opportunities you could have with Kioxia in the future. All of this has made him oppose the merger in such a way that it has ruined the companies’ plans to become one.
Of course, the breakdown of merger negotiations between Western Digital and Kioxia It does not mean that they will not continue working together on various projects.. In fact, as we have mentioned, they operate several factories between the two, and also jointly develop NAND flash memory and other next-generation production nodes. These and other projects of the two will continue to run as normal.
