Western Digital, Kioxia Eye Merger In Potential $20B Deal: WSJ

Both Western Digital and Micron originally showed interest in Kioxia earlier this year, but talks there went quiet and Micron seems to have dropped out of the conversation. Should WD and Kioxia merge, it would strengthen WD’s position as the top disk and flash drive manufacturer and less concerns about competition with China’s electronics industry.

Two of the few remaining disk and flash drive vendors may be looking to tie the knot.

The Wall Street Journal Wednesday reported that U.S.-based Western Digital and Japan-based Kioxia Holdings are in advanced talks to merge in a deal that could reach a value of over $20 billion.

The Journal, citing unnamed sources familiar with the matter, said a deal could be reached as soon as mid-September under which San Jose, Calif.-based Western Digital would acquire Kioxia with stock and appoint current Western Digital CEO David Goeckeler as CEO of the combined company.

[Related: 2021 Storage 100: The Data Conversation Starts Here]

This is not the first time a potential merger between the two has been reported. The Wall Street Journal in March reported that both Western Digital and Boise, Idaho-based DRAM and flash memory manufacture Micron were looking at a possible acquisition of Kioxia in a deal that might value Kioxia at about $30 billion.

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. Kioxia last year postponed a planned IPO because of export restrictions related to sales to China-based Huawei as well as issues related to the COVID-19 coronavirus pandemic.

Kioxia and Western Digital did not respond to CRN requests for further information by press time.

A merger with Kioxia would give Western Digital access to top-notch flash memory and SSD technology during a time when the U.S. government and IT industry are both looking to reduce reliance on overseas suppliers of high-value technologies in the face of competitive threats from China where much of the storage industry’s production is centered.

Kioxia last Fall postponed what had been expected to be Japan’s largest IPO in 2020. Kioxia had planned to list on the Tokyo Stock Exchange by offering up to about $3.2 billion in shares. The IPO could still go through in 2021.

The Journal reported that there is now guarantee that Western Digital and Kioxia would definitely come to an agreement on a merger.

Western Digital, which in 2011 acquired rival Hitachi GST, is the world’s largest storage drive vendor. It is followed by Seagate Technology at second place, and Toshiba at third. Korea-based Samsung also stands out because of its leading role in SSD production.