Western Digital Corporation and the japanese Kioxia Holdings Corp. have agreed to a dual listing if this merger occurs.
The economic downturn, particularly in the IT sector, has resulted in SSD prices falling to historical levels, becoming high-performance economic solutions for users in front of HDDs. If a merger between the two companies is implemented, the new conglomerate would take over a third of the NAND flash market, competing fiercely with Samsung Electronics in South Korea.
Kioxia and Western Digital produce NAND chips in Japan, which do not require external power to keep data, which makes it feasible for its use in smartphones, televisions, data center servers, and public announcement display panels. Both companies are still deciding whether or not to terminate their flash business.
Kioxia, one of the world's largest producers of flash memory and solid-state storage, is currently a key supplier to Western Digital. However, another Japanese technology giant, Toshiba, has recently acquired Kioxia, putting the company in position to close a chain of companies.
Western Digital's flash business would be phased out if the deal is agreed upon, and Kioxia would be combined, although this would mean that the company would be listed on both the United States stock market and the Japanese stock market, although in this second instance it would eventually exist.
The discussions between Kioxia and Western Digital began a couple of years ago with the intention of completing the union in excess of 20 billion dollars, but they stalled and it was eventually impossible to complete the union. Now, in September 2023, it is anticipated that the union will be completed for the same economic value.
Although neither of the two companies has decided to make public remarks, it is true that after the announcement, Western Digital's stock climbed by 8%. In addition, in June, WD announced that it was looking for other strategic alternatives, such as the separation of its flash memory and hard drives division.
The SSD segment has become extremely competitive due to its unlimited possibilities. With the merging of Kioxia and Western Digital, there is a large intellectual property and patent collection in being able to produce 3D NAND flash memories and continue to manufacture HDDs.
Both companies would be faced with a big hurdle in the execution of their merger, as they will examine first-hand how this affects legal competition in the marketplace, since it would involve the taking control of more than a third of the SSD manufacturing process.
There are instances where international regulatory bodies (from the United States, Japan, the United Kingdom, China, and the European Union) have prevented mergers, such as by prohibiting NVIDIA from buying ARM. Despite this, SK Hynix has been successful with the division of SSD and 3D NAND memories of Intel, although Intel's competitive advantage in this market was modest.