Western Digital is reportedly interested in acquiring Kioxia for $20 billion

On Wednesday, Eastern Time, the Wall Street Journal quoted people familiar with the matter as saying that Western Digital and Japanese semiconductor company Kioxia Holdings Corp. are in advanced negotiations on a stock merger worth US$20 billion (approximately RMB 130 billion).

Some analysts predict that if the merger and acquisition deal is completed, Western Digital may control one-third of the global flash memory market.

The two companies could reach an agreement as early as mid-September, with Western Digital CEO David Goeckeler set to run the combined company, the report said.

As soon as the news came out, Western Digital's stock price rose sharply during the trading session, once rising by 14%, and then fell back to 7.8% at the close. The market value increased by US$1.452 billion, or about RMB 9.5 billion.

Kioxia Holdings Corp., the world's second-largest flash memory chip maker, reportedly shelved plans last year for Japan's largest initial public offering (IPO) in 2020. Earlier, financial magazine Diamond reported that the company planned to conduct an IPO as early as September. The Wall Street Journal report said that if Kioxia fails to reach an agreement with Western Digital, the IPO may still proceed.

The Western Digital merger rumors come at a time when the global chip industry is facing a widespread supply shortage, with manufacturers of automobiles, laptops, home appliances and smartphones all facing some degree of supply chain difficulties.

Public information shows that Kioxia, formerly known as Toshiba Memory, was sold by Toshiba Corporation (6502.T) to a consortium led by US private equity firm Bain Capital for US$18 billion in 2018. According to its 2020 annual report, Toshiba still holds approximately 40.6% of Kioxia's shares.