Kioxia Offers SK Hynix Access to its Japanese Plants to Facilitate Western Digital Deal

The Japanese 3D NAND chip manufacturer, Kioxia, has proposed giving its investor, SK Hynix, access to its production lines in Japan. Kioxia’s intention with the offer is to change its investor’s opinion about a merger with Western Digital and resume talks on the subject, according to a report by Refinitiv on Yahoo Finance.

Talks between Kioxia and Western Digital, held last year, reached an impasse due to disapproval from SK Hynix. The latter feared the emergence of a huge conglomerate in the non-volatile memory market, which would pose robust competition. According to Jiji News Agency, Kioxia is seeking SK Hynix’s approval for the deal in exchange for the opportunity to manufacture chips at Japanese factories jointly run by Kioxia and Western Digital.

The implementation of this proposal would enable SK Hynix to significantly boost its 3D NAND memory production volumes without investing in expanding its capabilities or creating new production lines. The financial aspect of the potential deal between Kioxia and Western Digital remains uncertain. At this point, neither party has confirmed the existence of such an offer.

According to third-quarter 2023 data from market analysts, TrendForce, in the event of a merger between Kioxia and Western Digital, the resulting conglomerate would control roughly a third (31.4%) of the global 3D NAND revenue market. This percentage is significantly higher than SK Hynix’s share (20.2%) and comparable to Samsung’s (31.4%). However, even if a portion of Kioxia’s production capacity moves to SK Hynix, the new company would likely remain larger than the South Korean memory manufacturer, which explains why the latter would still view such a merger as a severe threat.