Western Digital And Kioxia Reportedly Poised To Form $20 Billion NAND Flash Goliath

Western Digital and Kioxia might combine forces to give Samsung a serious run in the NAND flash memory sector. While nothing has been announced, it's said the two firms are in "advanced" discussions about a stock merger valued at $20 billion. A deal could potentially be reached within the next several weeks (before October).

Sources who are apparently familiar with the situation claim the talks have been going on for some time now, and recently reached a fever pitch, according to a report in The Wall Street Journal. The idea being discussed is having Western Digital finance the merger with stock. Western Digital boss David Goeckeler would probably run the outfit.

If this happens, it would be a major move in the memory market. Samsung has been the dominant force in the NAND flash memory sector, accounting for around a third of the market (33 percent). Meanwhile, Kioxia and Western Digital sit at around 19 percent and 15 percent, respectively, as the next two largest players in the NAND flash industry.

Should Western Digital and Kioxia decide to combine forces, the resulting outfit would roughly be on equal footing on Samsung, which current holds a comfortable lead over the two. It's not a foregone conclusion, though, as even if an agreement is reached, it would have to pass regulatory scrutiny in the United States and other territories.

That can be difficult with deals of this magnitude. NVIDIA, for example, is still in the process of acquiring Arm as it seeks regulatory approvals, and a few years, Qualcomm ended up paying NXP a $2 billion termination fee after abandoning a $44 billion takeover bid, because it couldn't get regulatory approval in China.

It also depends on what Kioxia ultimately wants to do. Joining forces with Western Digital in $20 billion stock deal is attractive, but it could also opt for an initial public offering (IPO) instead.

Kioxia, by the way, was spun out of Toshiba a few years ago. Toshiba still owns a nearly 41 percent stake in Kioxia, while private equity firm Bain Capital owns the lion's share at almost 56 percent. Hoya Corporation owns the other 3 percent.