The Wall Street Journal reported today that chipmaker Western Digital is in talks to merge with Kioxia Holdings (one of the largest manufacturers of flash memory). The deal is expected to be worth $20 billion.
The news helped push other semi stocks north, granting the entire sector some reprieve from recent bearish narratives. ⚡ The VanEck Vectors Semiconductor ETF picked up 1.09% today.
Flash memory is the backbone for solid state storage, flash drives, and other types of “non-volatile” data storage devices. For that reason, it has become a critical ingredient in computer equipment over the last decade. In Q1 2021, Kioxia represented 18.7% of NAND flash manufacturers’ revenue. Kioxa was second to only Samsung, which owns over a third of the market.
Western Digital, a goliath in data storage, wasn’t far behind. WD owns 14.7% of the market, meaning a combo of these two players could pose a strong threat to Samsung’s market leadership… still, it’s not over ’til it’s over.
Several months ago, $WDC and $MU were both rumored to be seeking a deal with the Japanese company. Even amidst all the M&A buzz in the semiconductor space, not every deal has closed. For example, Intel’s rumored attempts to acquire GlobalFoundries went in vain. 💁♀️
It’s expected that GloFo will take the IPO path by itself, and Kioxa could possibly opt to do the same. Kioxia is majority-owned by Bain Capital Private Equity and Toshiba.
$WDC rose 7.8% today on the news.