The Japanese manufacturer of NAND memory chips and SSDs, Kioxia, may yet be talking to Western Digital (WD) again about a possible merger of their NAND/SSD units. Also, the majority shareholder, Bain Capital, is said to want to give guarantees to fellow stakeholder SK Hynix.
About half a year after the earlier merger talks between Kioxia and WD were halted, these talks appear to be back on. According to Japan’s 47News, both NAND flash memory and SSD manufacturers have reportedly resumed merger talks. With this, they want to further expand the existing joint venture for manufacturing NAND memory chips in Japan.
SK Hynix indirectly troublesome
The talks are complicated by the fact that Kioxia has three major shareholders: Japanese investment fund Bain Capital is the majority shareholder with 56 percent, original parent company Toshiba with 41 percent and Japan’s Hoya with three percent. In addition, five parties participate in the Bain Capital consortium, including the South Korean chip manufacturer and direct competitor of Kioxia, SK Hynix.
The latter company was very troublesome during the earlier negotiations. Mainly because it was concerned about what stake this company would have in the Kioxia-WD merger. Furthermore, there were concerns about whether this was too much competition with its own NAND business.
Kioxia and Bain Capital give assurances
According to 47News, Kioxia would now indicate to SK Hynix intentions to cooperate with this manufacturer after the merger. Bain Capital is said to be indicating to the South Korean chip manufacturer that it can own a part of the future merger company.
Whether the latter is an option for the South Korean manufacturer is still unclear. SK Hynix already has two NAND architectures, and adding a third could make (manufacturing) business complex.
Troubled relationship
Merger talks between Kioxia and WD over the NAND memory chip and SSD business have been ongoing for some time. The two parties have been in talks on the subject since 2021. Each time, these talks foundered on various issues, such as business value and also the attitude of regulators was often a source of concern.
Also read: Western Digital walks away from Kioxia merger talks
WD says Kioxia is not the only party who is pressured under this merger. Activist shareholder Elliot management has previously pushed for a spin-off of WD memory chip production. WD was also working on a restructuring plan in the past.
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