Kioxia Applies for Listing on Tokyo Stock Exchange... Largest Since SoftBank

Nikkei "Secures 15% Stake in SK Hynix at IPO"

SK Hynix, which has an indirect investment in Japanese memory semiconductor manufacturer Kioxia Holdings (formerly Toshiba Memory), submitted a listing application to the Tokyo Stock Exchange on the 23rd, NHK reported.

Kioxia is the world's third-largest NAND flash company, having become independent from Toshiba in June 2018 and changing its name to the current one in 2019. Kioxia is funded 56% by a Korea-US-Japan consortium including Bain Capital, and 41% by Toshiba. SK Hynix invested about 4 trillion KRW in the consortium in 2018.

The Nihon Keizai Shimbun (Nikkei) forecasted that upon Kioxia's listing, its market capitalization could exceed 1.5 trillion yen (approximately 13.7 trillion KRW), potentially becoming the largest since SoftBank's listing in 2018 (7.18 trillion yen).

Bain Capital and Toshiba are expected by Nikkei to gradually sell their shares after Kioxia's listing. If the consortium sells shares, SK Hynix is also likely to dispose of part of its stake to recover funds.

Kioxia was approved for listing on the Tokyo Stock Exchange in 2020, but the plan was postponed just before listing due to market uncertainty caused by the US-China trade conflict.

However, with rising sales of smartphones and PCs increasing demand for memory semiconductors, Kioxia recorded a record high net profit for the second quarter of this year at 69.8 billion yen (approximately 64 billion KRW).

Accordingly, it appears that Kioxia has challenged listing again to increase funding sources and prepare for investment competition. Kioxia attempted to merge its memory division with US-based Western Digital to compete against Samsung Electronics, the market leader in NAND flash. However, the plan was scrapped due to opposition from SK Hynix, the second-largest NAND flash company.

Nikkei reported, "SK Hynix holds convertible bonds (CB) of Kioxia and will acquire about 15% of the shares after listing," adding, "(SK Hynix) has not agreed to the management integration of Kioxia and Western Digital's memory businesses, raising concerns about potential conflicts over management strategies."