[Asia Economy Reporter Suyeon Woo] SK Hynix has stated that it is not considering recovering its investment in Japanese semiconductor company Kioxia, drawing attention to the background of this stance. Amid rising expectations for the reorganization of the NAND flash industry, with recent reports that U.S. semiconductor companies Micron and Western Digital are considering acquiring Kioxia, SK Hynix's role is being highlighted.
On the 9th, at a Semiconductor Association chairman meeting held at the Western Hotel in Jung-gu, Seoul, chaired by Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy, SK Hynix CEO Lee Seok-hee told reporters, "There is no change in our investment plan for Kioxia, and we have no plans to recover the investment."
Recently, news that U.S. competitors in the NAND market, Micron and Western Digital, are each considering acquiring Kioxia led the industry to suggest the possibility that SK Hynix, which invested about 4 trillion won in Kioxia shares, might recover its investment. The delay of Kioxia's long-prepared initial public offering (IPO) beyond the original schedule also supported such expectations.
However, on this day, SK Hynix clearly stated that there are no plans to recover the investment. The industry is offering various interpretations of this position. First, there is a possibility that the valuation gains on Kioxia's shares could increase further ahead of the semiconductor supercycle.
According to the industry, SK Hynix earned valuation gains exceeding 1.7 trillion won last year from its investment in Kioxia shares. In 2017, SK Hynix made equity investments in Kioxia with 2.7 trillion won through a fund and 1.3 trillion won in the form of convertible bonds (CBs). If the semiconductor market enters an upcycle and Kioxia succeeds in its IPO, the valuation gains on the shares could increase further.
Recently, foreign media such as Bloomberg reported that Kioxia is accelerating its IPO efforts rather than negotiating share sales. Bloomberg stated, "Kioxia, which postponed its Tokyo Stock Exchange listing last year due to COVID-19, is most likely considering an IPO to enhance shareholder value."
Additionally, some experts view the possibility of Micron or Western Digital acquiring Kioxia, valued at 30 billion dollars (approximately 34 trillion won), as low. If the memory semiconductor market booms in the future and Kioxia's valuation rises, the acquisition cost could exceed 30 billion dollars.
Kang Gyo-jin, senior analyst at Korea Credit Rating, said, "Considering the importance of Toshiba, Kioxia's predecessor, in the Japanese semiconductor industry and the lack of sufficient cash reserves held by Micron and Western Digital compared to the 30 billion dollar sale price, the actual acquisition possibility seems uncertain."
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