'Another Major Semiconductor M&A' US Western Digital's Acquisition of Japan's Kioxia Gains Momentum

Negotiations Underway for $20 Billion Deal
Possibility of US-Japan NAND Flash Alliance Formation
Kioxia's Independent IPO Also Not Ruled Out

[Asia Economy New York=Correspondent Baek Jong-min] It has been reported that the U.S. hard disk company Western Digital is pushing to acquire the Japanese NAND flash memory company Kioxia for $20 billion.

According to the Wall Street Journal (WSJ) on the 25th (local time), recent merger and acquisition discussions between the two companies have intensified, and sources said that a deal could be reached as early as mid-September.

Kioxia was originally expected to go public (IPO) through the Tokyo Stock Exchange in September, but it appears that M&A is also being pursued simultaneously.

WSJ explained that it is unclear whether Kioxia will choose IPO or M&A.

Previously, U.S. companies Western Digital and Micron had each been pursuing the acquisition of Kioxia. However, as Kioxia began considering an IPO, Micron withdrew from the acquisition battle, and Western Digital seems to have continued negotiations.

Kioxia, which was spun off from Toshiba's NAND flash business, was sold in 2018 to a Korea-U.S.-Japan consortium including SK Hynix and Bain Capital for $18 billion. Currently, Kioxia's market capitalization is around $19 billion.

With the U.S. government hoping to expand the semiconductor supply chain, Western Digital's acquisition of Kioxia is a deal worth pursuing. SK Hynix is in the process of acquiring Intel's NAND flash business. Western Digital also owns SanDisk, a NAND flash storage device company.

China is the biggest obstacle to Western Digital's acquisition of Kioxia. WSJ analyzed that although there will be pressure from Washington, China's approval of the merger could be the biggest hurdle. Amid escalating U.S.-China tensions, there is speculation that China could block the transfer of Japan's largest NAND flash company Kioxia to an American company.

Previously, the acquisition of Dutch automotive semiconductor company NXP by mobile semiconductor company Qualcomm was blocked due to China's disapproval.