Western Digital and Kioxia flash memory business merger negotiations have been terminated

Since 2021, Western Digital and Kioxia have engaged in intermittent negotiations concerning the merger of their NAND flash production operations. Recent whispers in the industry intimated that an impending resolution was on the horizon, promising the birth of the world’s preeminent NAND flash manufacturer.

However, according to Nikkei Asia, the consolidation talks between Western Digital and Kioxia have now been regrettably terminated. The cessation stems from fervent opposition by SK Hynix, a significant indirect shareholder of Kioxia, compelling Western Digital to retract from the dialogue. Furthermore, Bain Capital, Kioxia’s principal shareholder, harbored divergences over merger stipulations, persistently failing to find common ground on transaction intricacies.

The industrial consensus postulates that if Western Digital and Kioxia could synergize their respective strengths, amplifying their competitive edge and profitability, they would potentially challenge Samsung’s market hegemony. As per TrendForce statistics for the second quarter of 2023, Kioxia commands a market share of 19.6%, Western Digital holds 14.7%, while Samsung and SK Hynix stand at 31.1% and 17.8% respectively. To contextualize, a successful fusion of Kioxia and Western Digital would yield a combined market share of 34.3%, surpassing Samsung to ascend as the paramount NAND flash supplier.

SK Hynix, already the globe’s third-largest NAND flash producer, perceives a business amalgamation between Western Digital and Kioxia as a discernible threat to its core operations. Toshiba, in a strategic pivot in 2018, elected to divest its NAND flash segment, ultimately selling it to an investor consortium spearheaded by Bain Capital. This coalition incorporated titans like Apple, SK Hynix, Dell, and Seagate.

Although the merger dialogue between Western Digital and Kioxia has reached an impasse, both entities will persist in jointly operating their wafer fabrication plants, ardently advancing NAND flash technology and pioneering next-generation process nodes.