SK Hynix Says No To Kioxia, Western Digital Merger

DRAM and flash memory manufacturer SK Hynix, which reportedly owns about 15 percent of Kioxia, Thursday said it opposes the merger between SSD manufacturers Kioxia and Western Digital for now, saying it is not in the best interests of shareholders.


The on-again, off-again merger talks between flash memory and SSD manufacturing giant Kioxia and flash and spinning disk developer Western Digital appear to be off again.

Korea-based DRAM and flash memory chipmaking giant SK Hynix, which reportedly owns a 15-percent stake in Japan-based Kioxia, on Thursday indicated its resistance to a long-awaited merger between Kioxia and Western Digital.

Kim Woo-hyun, chief financial officer for SK Hynix, on Thursday was asked by an analyst during the company’s third fiscal quarter 2023 financial analyst conference call about the widely-reported merger plans between the company.

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Kim, speaking in Korean followed by an interpreter, said his company was not agreeing to the merger at this time.

“The company is not agreeing to the deal at this time, in light of the overall impact on the value of the company’s investment in Kioxia,” Kim said. “Please understand that we cannot disclose the specific reasons or comment on the deal process due to the confidentiality agreements with Bain. But I do wish to make one thing clear, we will be making the decision for the sake of all stakeholders, not only the shareholders but also Kioxia as well.”

While SK Hynix does not have voting rights in Kioxia, it does have a 15-percent stake in the company thanks to its investment in a special-purpose investment vehicle led by Boston-based Bain Capital, according to the online news site Business Korea. SK Hynix does, however, have the right to consent to the merger, Business Korea wrote.

SK Hynix’s decision to put the merger agreement on hold follows news two weeks ago that Kioxia and Western Digital were getting close to agreeing on a merger of the two, which would form the world’s largest NAND memory manufacturer. Reports at the time suggested that just over 50 percent of the new company would be owned by Western Digital shareholders, with the remainder owned by Kioxia shareholders.

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

News of the SK Hynix decision to disagree with the proposed merger comes just over a month after reports that Kioxia’s lenders have committed to refinancing $14 billion in loans to help Kioxia and Western Digital merge.

Kioxia, which until October 2019 was known as Toshiba Memory, is a world leader in flash 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.

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.

Speculation about bringing Western Digital and Kioxia together to build a flash memory and SSD giant has been going on for over two years.

Western Digital and Kioxia were looking at a possible merger in August 2021, although those talks went nowhere.

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 in June 2022 said it was evaluating strategic and financial alternatives, including a full separation of its flash business. A month earlier, activist investment company Elliott Investment Management asked Western Digital to split into two companies, one focused on spinning hard drives and the other on flash drives, as a way to maximize the value of both technology lines.