TOKYO, Oct 26 (Reuters) – Western Digital Corp and Japan’s Kioxia Holdings have reportedly ended their discussions to form one of the world’s largest chip manufacturers, according to the Nikkei newspaper. This news comes after the U.S.-based company informed Kioxia that it will withdraw from the merger talks. The failure to secure approval from SK Hynix, an indirect shareholder in Kioxia, was cited as the reason for the termination.
Furthermore, the report states that the companies were unable to reach an agreement on conditions with Bain Capital, the largest shareholder of Kioxia. Their plan to combine their flash memory businesses could have resulted in a significant share of the global NAND flash market, potentially challenging the dominance of Samsung Electronics and SK Hynix, the third-largest maker of NAND flash memory worldwide.
As of now, Western Digital, Kioxia, and Bain Capital have not responded to Reuters’ requests for comments regarding this development. Following the announcement, Western Digital’s shares plunged by 12%.
This potential merger was driven by the need to address the global chip glut and the sluggish demand for flash memory chips. Chipmakers have been under pressure to consolidate in response to these challenges. Despite discussions between Kioxia and Western Digital dating back to 2021, the negotiations frequently stalled due to various issues, including discrepancies in valuation.
(Reporting by David Dolan and Aditya Soni, Juby Babu and Chavi Mehta in Bengaluru; Editing by Shweta Agarwal)
