Western Digital And Kioxia Merger Talks Accelerating: Report

Western Digital and Kioxia have been in and out of merger talks for years, but a slump in the flash storage market may be pushing the two to accelerate their talks and look for ways to increase their competitive position.


The on-again, off-again merger talks between Western Digital and Kioxia appear to be on again.

Reuters, citing two sources with knowledge of the matter, reported Monday that the two companies are looking to speed up merger talks in the midst of a slumping flash memory market that is increasing the pressure on Kioxia, the world’s second-largest flash memory manufacturer, and Western Digital, the fourth, to consolidate.

Western Digital, the San Jose, Calif.-based developer of hard and flash storage drives and storage systems, and Kioxia, the Japan-based developer of flash memory and flash storage drives, have been in and out of merger talks for several years.

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Western Digital and Kioxia reportedly discussed options for a merger in August of 2021 but did not come to an agreement.

Prior to that, Western Digital and Boise, Idaho-based DRAM and flash memory manufacturer Micron were looking at a possible acquisition of Kioxia in a deal that might value Kioxia at about $30 billion.

Western Digital and Kioxia have a 20-year joint venture for developing flash memory at the Yokkaichi Plant, the largest semiconductor plant in Japan.

Most recently, the two engaged in discussions January.

Neither Western Digital nor Kioxia responded to a CRN request for further information by press time.

Reuters reported that the merger talks are now centered on a plan that would create a joint company of which 43 percent was owned by Kioxia, 37 percent by Western Digital, and 20 percent by the rest of the existing shareholders of the two companies.

However, Reuters said, there is no certainty that such a deal would be reached.

Western Digital and Kioxia have a 20-year joint venture for developing flash memory at the Yokkaichi Plant, the largest semiconductor plant in Japan.

The two companies in late March jointly unveiled their newest 3D flash memory technology they said reduces costs with new processes and architecture. The new 218-layer 3D flash leverages 1-terabit TLC and QLC with four planes with a new lateral shrink technology to increase bit density by over 50 percent, the two claimed. It also features high-speed NAND I/O at over 3.2 gigabits per second, a 60 percent improvement over the previous generation, with a 20 percent write performance and read latency improvement.

Western Digital in June said it was evaluating strategic and financial alternatives, including a full separation of its flash business. Such a separation, should it come to pass, would follow a similar move by Intel late 2021 to sell its flash technology business to South Korea-based SK Hynix, which became a new flash storage company named Solidigm.

Kioxia, which until October of 2019 was known as Toshiba Memory, continues to be a world leader in memory and SSD technologies, including SLC NAND flash memory, NAND with integrated controllers, and 3D BiCS FLASH technology, along with enterprise, data center, and client SSDs.

A merger with Kioxia would give Western Digital access to top-notch flash memory and SSD technology during a time when the U.S. government and IT industry are both continuing to look for ways to reduce reliance on overseas suppliers of high-value technologies, in the face of competitive threats from China where much of the storage industry’s production is centered.

This comes at a time when Intel is planning to invest over $20 billion to construct two new leading-edge chip factories in Ohio, in addition to $20 billion it plans to invest in two new fabs in Arizona and $3.5 billion it plans to invest in semiconductor packaging facilities in New Mexico.