SK Hynix reportedly stops Kioxia and Western Digital merger

In recent months, we've heard persistent rumours that Western Digital and Kioxia were looking to merge, allowing both companies to join forces to challenge Samsung's position in the NAND market. However, according to a new report, SK Hynix, has opposed the merger and talks may have now come to an end. 

According to Nikkei (via Tom's Hardware), the proposed merger was seen as a strategic move to challenge Samsung NAND market dominance by combining the firms' resources and expertise, as well as removing rivalry between the companies that co-own manufacturing sites and jointly develop NAND flash memory.

However, SK Hynix, the world's third-largest NAND provider with a 17.8% market share, strongly resisted the merger. It invested around $2.667 billion in a consortium headed by Bain Capital that previously bought Kioxia in 2018. Moreover, it expressed concern that the planned merger would harm its market position and future cooperation chances with Kioxia. This proved to be a critical impediment to the merger's realisation.

SK Hynix's chief financial officer, Kim Woo-Hyun, stated during the company's earnings call that the company is not agreeing to the deal due to the impact on the value of the company's investment in Kioxia. He added that he could not disclose specific reasons or comment on the deal process due to confidentiality agreements with Bain. Still, he ensured that the decision was taken for the sake of all stakeholders and Kioxia itself. Despite the termination of merger discussions, Western Digital and Kioxia will continue to cooperate on fab operations and the development of NAND flash memory and next-generation production nodes.

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KitGuru says: Do you think the merger between Western Digital and Kioxia should have gone through, or is it better for the market to be divided across more players?

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