‘WD in talks with Kioxia about a possible $20-billion merger’

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Data storage company Western Digital’s shares jumped 7.8% today after the Wall Street Journal published a report that the company is in merger talks with Kioxia, a leading flash memory manufacturer.

The deal could be worth more than $20 billion, according to WSJ’s sources. The sources say that Western Digital and Kioxia may reach an agreement as early as mid-September. However, there is a chance Kioxia could opt for an initial public offering instead of a merger.

Western Digital, based in San Jose, California, is one of the leading makers of storage drives.

Western Digital through the years

Western Digital has been operating for more than half a century and ranks 182 on the Fortune 500. After its launch in 1970, Western Digital focused on making equipment to test semiconductors. Over the years, WD moved into other markets and at one point, was the world’s leading provider of calculator chips. During the ’80s, the company forayed into storage.

Today, WD supplies flash memory chips and disk drives for data centers, smart cars, personal computers, and other systems. Last quarter, WD‘s data center disk business alone shipped more than 100 exabytes (1 exabyte = 1000 petabytes) of hardware.

Kioxia

The Tokyo-based company used to be part of the Toshiba Corporation before it was spun off into an independent business in 2018. The company is now owned by Bain Capital and is the world’s second-largest flash memory chips maker as of August 2020.

The company makes some of Western Digital’s flash products and announced in October that it plans to build a new flash plant (with a $9.5 billion price tag) in collaboration with Western Digital to address the growing demand for faster data storage solutions.

The companies already have a close relationship in research and development, which could help the talks move faster.