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Western Digital-Kioxia chip merger talks shelved

AFP – Western Digital of the United States (US) and Japan’s Kioxia have shelved talks for a merger that would have created one of the world’s largest memory chip makers, media reports said.

Memory chips are used in everyday devices such as smartphones and storage drives, as well as in industrial and medical equipment, but their prices are notoriously volatile.

Kioxia, formerly the semiconductor unit of Japanese tech giant Toshiba, was acquired by US investment firm Bain Capital in 2018. There have been long-running discussions between Western Digital and Kioxia about merging to form a firm that would compete at the top of the world’s memory chip market.

However, these talks have been called off, media reports said, over issues including the opposition of South Korea’s SK Hynix, one of the top global producers of memory chips.

The breakdown was first reported by Japan’s Nikkei daily.

PHOTO: ENVATO

SK Hynix holds an indirect stake in Kioxia as a member of the Bain-led group that acquired it, and voiced its opposition to the Western Digital deal.

“The South Korean firm is not agreeing to the deal at this time in light of the overall impact on the value of the company’s investment in Kioxia,” SK Hynix’s Chief Financial Officer Kim Woohyun said during an earnings call.

Kim did not share more details, citing a confidentiality agreement with Bain.

“We will be making the decision for the sake of all stakeholders, not only the shareholders but also Kioxia,” he added.

Western Digital’s shares on the Nasdaq were down more than nine per cent at the close on Thursday.

Kioxia is the world’s third-largest flash memory maker, followed by Western Digital.
Global memory chip sales reached nearly USD130 billion in 2022, according to the Semiconductor Industry Association.

However, the global economic slowdown has dealt a blow to memory chip sales, and the weakening demand has hit the profits of market leaders such as South Korea’s Samsung Electronics.

Discussions on the Western Digital-Kioxia merger may yet resume, Bloomberg reported, citing people familiar with the situation.

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