Tsinghua Unigroup + WD's Flash technology + Micron's DRAM technology = China's new memory battlefield

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WD, the world's leading hard drive manufacturer, announced that it would acquire NAND Flash giant SanDisk for approximately US$ 19 billion ( approximately NT $ 618.6 billion ). As China's Tsinghua Unigroup holds approximately 15% of WD's shares , it has apparently obtained a ticket to smoothly enter the NAND Flash industry. It is reported that if necessary, the Japanese government will assist Toshiba in handling its Japanese JV wafer factory with SanDisk to avoid repeating the regret of Elpida, but it seems that in this battle, Micron faces severe challenges and may accelerate its move towards China.

Semiconductor industry consolidation has reached a climax again. It is reported that the Cintiq, which was waiting for a price, was definitely bought by WD . It is reported that another bidder, Micron, gave up because the price was too high. Cintiq is the world's leading manufacturer of NAND Flash products such as flash memory cards and USB flash drives, and is also the wafer factory joint venture partner of Toshiba, the world's second largest NAND Flash company. The extraordinary price of selling itself to WD , which recently formed an alliance with Tsinghua Unigroup , has triggered unlimited imagination for the chips for the establishment of the memory industry in China.

WD will pay $ 86.5 per share of Cintiq , including $ 85.1 per share in cash and 0.0176 shares of common stock, for a total amount of $ 19 billion to acquire NAND Flash giant Cintiq, a premium of about 15% .

If "Elpida copycat" cannot happen again, Japanese government will help Toshiba

Analyzing this merger case, from the perspective of the global NAND Flash industry battle, there are three important key points. First, Toshiba and Cintiq have jointly established a NAND Flash wafer factory in Japan for more than 15 years. After WD acquires Cintiq, it may not be able to receive the equity of the joint venture wafer factory. According to the agreement signed by a general joint venture company, if one of the two parties is acquired, the other party has the right to become the first priority to receive the equity, which means that Toshiba has the priority to consider whether to acquire Cintiq’s equity.

Based on the above analysis, Toshiba may have two development directions in dealing with the joint venture wafer factory. The first is to maintain the new shareholder WD 's 50% equity and production capacity of the joint venture , which means that the joint venture relationship will be changed from Toshiba / Cintiq to Toshiba /WD . However, this has potential risks, which means that the mainland has the opportunity to enter the joint venture to take a peek at Toshiba's secrets in NAND Flash production management. Toshiba will be very cautious about this.

Therefore, the second possible development is that Toshiba buys out the shares of Cintiq and turns the joint venture into a company wholly owned by Toshiba. However, the biggest problem is that Toshiba does not have enough funds, and the morale of Toshiba has been weakened due to the recent scandal of false accounting.

It is understood that under this development, the Japanese government is very likely to help Toshiba with funds. Japan's panel industry is sluggish, and the only DRAM manufacturer Elpida was fooled by the then president ( Tukota ) Yukio Moto. It was originally just a play hoping to "fake bankruptcy and get real protection", but in the end it angered the Japanese government and Elpida disappeared from the global DRAM industry. This time, the Japanese government will definitely do its best to protect Toshiba and maintain Japan's only remaining high-value and profitable NAND Flash industry, and help Toshiba solve the problem of the joint venture.

Toshiba reverses and wins over Kingston and Phison

If it develops towards the second version, Toshiba will be responsible for all the production capacity and supply of the wafer factory and can still support WD . The two parties can sign a sales contract, but it will only be a pure supplier relationship.

Once Toshiba obtains financial assistance from the Japanese government and acquires all the wafer fab production capacity, it will be a big boon to companies in the Toshiba system, including memory module giant Kingston and NAND Flash solution giant Phison. This is because when Toshiba needs to handle so much NAND Flash chip production capacity, it needs help from experts who can move the goods, and Kingston and Phison are experts in this area.

If Toshiba continues to develop along this path, its position in the global memory market will be reversed. Toshiba is firmly in the second place in the global NAND Flash market, but its competitors, such as SanDisk , SK Hynix , and Micron, are both DRAM and NAND Flash manufacturers, and can balance operations. In the past, Toshiba relied on Elpida to support DRAM , but after Elpida went bankrupt, Toshiba has been isolated and helpless, and was named the most dangerous memory manufacturer. However, if Toshiba can obtain the support of the Japanese government, it will be the beneficiary.

Who is the loser when WD buys Cintiq? The answer is unexpectedly Micron

Who is the loser in WD 's purchase of Cintiq? The answer is unexpected. It may be an exaggeration to say that it is a loser, but this matter will put a lot of pressure on Micron.

First, Micron had been coveting the New Emperor for a long time, but finally felt that it was too expensive and was bought by WD ; second, Micron's close NAND Flash partner Intel decided to convert its wafer factory in Dalian to produce NAND Flash chips. Even Intel decided to bring NAND Flash technology to mainland China for production, although it is wholly-owned, but this has a different meaning.

Third, Tsinghua Unigroup originally saw Micron as having both DRAM and NAND Flash technologies, but now Tsinghua Unigroup has successfully obtained a new ticket in the NAND Flash layout, which means that Micron's bargaining chips have been sharply reduced. If China turns to cooperate with Hynix in a DRAM strategic alliance, Micron will be completely marginalized. How to convert the existing bargaining chips into great benefits is Micron's biggest task in this battle, but it also has to be very careful.

NAND Flash technology is in the pocket and the memory industry is booming

The last one to appear was the highlight. As expected by the market, the new battlefield of the global memory industry is China. China expressed its intention to buy Micron, poach Gao Qiquan, invest in WD , and WD bought Cintiq. All the developments were so close to the rhythm of China's desire to build its own memory industry chain.

The mainland originally started with DRAM technology, but the overall trend has shifted slightly to the NAND Flash industry. Coincidentally, the Cintiq opened a backdoor, making the entire memory war turbulent!

However, the industry is also very worried that if Tsinghua Unigroup acquires Cintec's NAND Flash technology and takes it to China to build a NAND Flash wafer factory, it may cause chaos in the global NAND Flash industry.

Furthermore, if Micron were to allow Tsinghua Unigroup to invest in it due to pressure, and successfully acquire DRAM technology, forming a triangle alliance of Tsinghua Unigroup, WD 's NAND Flash technology, and Micron's DRAM technology, it would be a huge bombshell for the global memory industry!

Source: Digitimes

DRAMeXchange , the storage division of international market research firm TrendForce, pointed out that in the past two years, solid-state drives have seen rapid growth, and their share of overall NAND Flash terminal demand will increase from 30% this year to 35% . They are the product with the strongest growth in NAND Flash terminal demand, and are also the hot commodity that semiconductor manufacturers and storage device manufacturers are vying for cooperation and mergers and acquisitions.

DRAMeXchange analyst Yang Wen-te said that in recent years, manufacturers with core solid-state drive technology have become the target of storage manufacturers and NAND Flash manufacturers, and this merger and acquisition can be said to be a win-win situation.

Western Digital's series of acquisitions in recent years

From Western Digital's perspective: the rise of solid-state drives has accelerated the evolution of related storage devices. Therefore, Western Digital's acquisition targets in the past three years have all been related to the core technology of Flash Storage , and the successful merger with SanDisk is one of Western Digital's most critical layouts in the SSD field.

SanDisk's series of acquisitions in recent years

From SanDisk's perspective: SanDisk is a NAND Flash wafer manufacturer and retail brand module manufacturer, and has been developing SSD or NAND Storage -related applications since 2006. In addition to the latest NAND Flash production capacity and patents, the mergers and acquisitions in the past few years have also enabled SanDisk to have key technologies related to Enterprise-SSD .

In the current situation where Samsung, Hynix, Micron, and Toshiba are difficult to be acquired, Sandisk may be a " not the best, but the most realistic " breakthrough for Tsinghua Unigroup Storage. Because Sandisk 's patent portfolio, R&D resources, etc. are rare cooperative resources in NAND flash . Sandisk is the only fabless company among the five major storage companies (Samsung, Hynix, Toshiba, Micron, Sandisk ) . It lacks in manufacturing technology, and its partner Toshiba is in a business quagmire due to financial fraud. It is reasonable to choose a transaction. The next step depends on the approval of many governments around the world, and there may be variables.

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