SK Hynix is ​​considering cooperating with Kioxia to produce HBM

According to MoneyDJ citing Jiji Press, South Korean memory giant SK Hynix is ​​exploring cooperation with Japanese NAND flash memory manufacturer Kioxia to produce high-bandwidth memory (HBM) for artificial intelligence applications.

According to a March 1 press release, production is expected to take place at a Japanese factory jointly owned by Kioxia and Western Digital (WD). On the other hand, Kioxia will evaluate the proposed collaboration based on semiconductor market conditions and its relationship with WD.

The report highlights that demand for HBM, a DRAM mainly used in artificial intelligence servers, is surging globally, driven by NVIDIA. In addition, according to a previous press release issued by TrendForce, the market shares of HBM's three major original manufacturers in 2023 are: SK Hynix and Samsung are both around 46-49%, and Micron is around 4-6%.

For SK Hynix, utilizing KIOXIA's existing factories in Kitakami, Iwate Prefecture, and Yokkaichi, Mie Prefecture, to produce HBM will enable the company to quickly establish an expanded production system.

At the same time, the Japanese joint venture factory between Kioxia and WD currently only produces NAND Flash. If the most advanced DRAM can be produced in the future, it will also contribute to Japan's semiconductor industry revitalization plan.

The report further stated that SK Hynix indirectly invested about 15% of Kioxia's shares through the US investment company Bain Capital. According to reports, Bain Capital is in behind-the-scenes negotiations with SK Hynix to seek to restart the KIOXIA/WD merger. However, according to sources cited in the report, "the collaboration and merger are two separate matters of discussion."

According to a previous report by the Asahi Shimbun on February 23, Kioxia and WD are expected to restart merger negotiations at the end of April. Although merger talks hit a snag last fall, both sides face existential pressure to expand. However, there is still uncertainty about whether the two parties can ultimately reach a merger agreement.

According to TrendForce data for the third quarter of 2023, Samsung continues to maintain its position as the world's largest NAND flash memory manufacturer, accounting for 31.4% of the market share. Followed by SK Group, ranked second with a market share of 20.2%. Western Digital occupies the third place with a market share of 16.9%, while Japan's Kioxia has a market share of 14.5%.

The Asahi Shimbun further pointed out that if Kioxia and WD, two companies that both produce NAND Flash products, merge, their scale will be comparable to that of global market leader Samsung Electronics.

According to reports, the Japanese government regards the Kioxia/WD merger as a "symbol" of Japan-US semiconductor cooperation and has provided support. However, merger talks stalled last fall, reportedly due to opposition from SK Hynix, which had indirectly invested in Kioxia.