All data are based on the daily closing price as of May 17, 2024

SK Hynix’s Reluctance Poses Hurdle for Kioxia’s Merger with Western Digital

South Korean semiconductor giant, SK Hynix, holding an indirect stake in Japan's Kioxia Holdings, is displaying hesitation towards endorsing Kioxia's proposed merger with U.S. rival Western Digital's memory chip operations.
South Korea
s 000660.KO Blue Chip 150 Tech 350 Semicon 75
Share this on

Sources indicate SK Hynix’s crucial approval is imperative for the merger to progress. As a contingency, the South Korean firm has initiated discussions with Japan’s SoftBank Group for a potential partnership should the Kioxia-WD merger plan face obstacles. Presently, SoftBank is not directly involved in the merger negotiations.

Efforts are underway by Kioxia and Western Digital to secure a loan commitment from financial institutions, possibly as early as this week. SK Hynix’s hesitancy to support the deal could potentially impact ongoing discussions with lenders.

The merger proposition outlines Western Digital’s intention to separate its memory chip business, uniting it with Kioxia under a newly established holding company. Post capital adjustments, WD shareholders would hold 50.1%, while the Kioxia side would own 49.9%. The resultant company would be based in the U.S., with its headquarters situated in Japan. Plans entail seeking listings on both the Nasdaq and the Tokyo Stock Exchange, with Kioxia’s President, Nobuo Hayasaka, slated to assume the presidency of the combined entity, alongside a Kioxia-majority board representation.

SK Hynix, presently the second-largest player in the global NAND flash memory sector, stands behind Samsung Electronics. A successful merger between Kioxia and Western Digital, currently ranked third and fourth respectively, would culminate in an entity of comparable stature to Samsung.

This potential merger would relegate SK Hynix to the third position, trailing behind competitors it once led. Furthermore, SK Hynix has been exploring potential collaborations with Kioxia, thus contributing to a sense of resistance towards Kioxia’s integration with another entity.

In the face of SK Hynix’s reservations, SoftBank emerges as an alternative partner. With ownership of British chip designer, Arm, and a strategic emphasis on artificial intelligence, a collaboration with Kioxia through SK Hynix could grant SoftBank vital access to semiconductor memory technology crucial for its data center pursuits.

SK Hynix is actively engaged in the development of DRAM products, referred to as “high bandwidth memory,” enabling swift and large-capacity data processing through chip stacking. For SoftBank, partnering with Kioxia via SK Hynix could represent a strategic move, securing the semiconductor memory technology pivotal for its burgeoning data center enterprise.

Share this on
Jakota Newsletter

Stay ahead in the JAKOTA stock markets with our roundup of vital insights

Icon scroll to top