Kioxia, Western Digital ‘In Detailed Talks’ About Merger: Report

Should the deal, talks about which have been going on for a couple of years, occur, the combined company would likely overtake Samsung as the world’s largest producer of NAND flash memory at a time when that market is in a downturn.

Kioxia and Western Digital are in “detailed talks” about a possible merger between the two companies, according to a report by Japanese news agency Kyodo News.

Kyodo Friday reported that Japan-based chipmaker Kioxia Holdings and San Jose, Calif.-based storage and memory manufacturer Western Digital are now in detailed talks about merging the two.

Kyodo, citing unnamed people familiar with the matter, said the two companies are looking into integrating their production and sales operations via a joint merger in which Kioxia would hold the majority.

[Related: Storage Vendors Evolve With The Times: 2023 Storage 100 ]

The news of progress in talks between Kioxia and Western Digital comes three weeks after reports surfaced that the two were in discussions over the merger after not coming to an agreement during talks in August of 2021.

Merger talks between Kioxia and Western Digital come at a time when NAND memory demand continues to decline following shortages that resulted from COVID-19 pandemic-related supply chain issues that drove prices to some of their highest levels.

Taipei, Taiwan-based market intelligence firm Trendforce Thursday said purchasing momentum in the NAND flash memory market declined in the first quarter of 2023. Shipment volume in the quarter increased only 2.1 percent over the prior quarter, while total revenue for the market decreased 16.1 percent over the same period, Trendforce reported. Average selling price decreased about 15 percent during that time as well.

In the first quarter of 2023, Samsung continued to be the NAND flash manufacturing leader with 34 percent of the market, according to Trendforce. Kioxia was second with a 21.5-percent share, followed by SK Group which includes SK Hynix and Solidigm at 15.3 percent, and Western Digital at 15.2 percent.

A merger between Kioxia and Western Digital would give the combined company a 36.8-percent market share, assuming consolidation of manufacturing capacity would not reduce total output.

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

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 of 2022 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.