SK Hynix Opposes Kioxia-Western Digital Merger

Japan's Kioxia and US Western Digital Discuss Merger
Japanese Media: "SK Hynix Opposes Merger Talks"

Exploring Business Talks with SoftBank Group Partnership
SK Hynix: "Reports on Cooperation Are Not True"

Discussions on the business integration between Japan's Kioxia (formerly Toshiba Memory), a producer of NAND flash memory semiconductors, and the U.S. company Western Digital are becoming more concrete. Amid this, there are claims that SK Hynix, which has invested in Kioxia, is opposing the current push for integration.

Japanese newspapers Nihon Keizai Shimbun (Nikkei) and Yomiuri Shimbun reported this on the 18th. Nikkei explained, "SK Hynix, which has an indirect stake in Kioxia, is showing reluctance toward the ongoing integration negotiations," adding, "SK Hynix is exploring a partnership with SoftBank Group (SBG) as a contingency plan in case the integration talks fail."

Currently, Kioxia and Western Digital are in final coordination for the business integration. The likely plan is for Western Digital to spin off its memory division and establish a holding company together with Kioxia. The holding company’s investment ratio is expected to be 50.1% for Western Digital and 49.9% for Kioxia, with Kioxia effectively taking charge of management.

Kioxia factory in Kitakami, Iwate Prefecture, Japan /

SK Hynix invested about 4 trillion won in 2018 in a Korea-U.S.-Japan consortium that included Bain Capital and others. This consortium is currently the largest shareholder of Kioxia, and SK Hynix holds shares indirectly. This is why SK Hynix has voting rights regarding this merger.

Nikkei reported that, anticipating the possibility that the integration talks may not succeed, SK Hynix is pushing for a partnership with SBG to propose new business plans to Kioxia. SBG, led by Chairman Masayoshi Son, owns the UK semiconductor intellectual property (IP) company Arm and has recently been focusing on artificial intelligence (AI) business.

For SBG, cooperating with SK Hynix and Kioxia could offer significant advantages in securing high-performance memory needed for AI business processes. Regarding this, SK Hynix stated, "It is not true that we are cooperating with SoftBank," and did not issue a separate statement about the merger.

Japanese media reported that Kioxia intends to secure a loan of about 2 trillion yen from Japanese financial institutions within this week to facilitate the integration with Western Digital. They also explained that without SK Hynix’s consent, Kioxia’s actions could be affected. It is said that SK Hynix is showing resistance due to concerns about the impact if the merger is completed.

SK Hynix Icheon Campus Entrance /
[Photo by SK Hynix]

According to market research firm TrendForce’s report on the NAND market share in the second quarter, SK Hynix holds 17.8%, ranking third. Combining the shares of second-ranked Kioxia (19.6%) and fourth-ranked Western Digital (14.7%) results in 34.3%, significantly surpassing SK Hynix. This is even higher than Samsung Electronics’ 31.1%, which is first place.

Within the semiconductor industry, even if this integration discussion succeeds, it is evaluated that obtaining approval from regulatory authorities in various countries will not be easy, as the importance of semiconductors grows and the interests of each country become sharply divided. In particular, opposition from China, which is in conflict with the U.S., could be significant.

In fact, U.S. semiconductor company Intel attempted to acquire Israeli foundry (semiconductor contract manufacturing) company Tower Semiconductor with a $5.4 billion investment, but canceled the acquisition contract in August due to non-approval by Chinese regulatory authorities. This has led to industry-wide expectations that future mergers and acquisitions (M&A) in the semiconductor sector will be difficult.

This content was produced with the assistance of AI translation services.