Western Digital is reportedly in advanced merger talks with Kioxia, in a deal that may close as soon as mid-September. The news comes from a report in The Wall Street Journal, which claims that long-running discussions between the companies have “heated up” in the past few weeks. The talks may be leading up to a deal likely to be valued at more than $20 billion and see further consolidation in the global chip industry.
Recently it was reported that both Micron and Western Digital were considering bids for Kioxia, formerly known as Toshiba Memory Corporation. It now appears that Micron is out of the running, leaving Western Digital — which already has a joint venture with Kioxia for the manufacture of NAND flash chips — to press ahead.
However, the WSJ cautions that there is no guarantee that Western Digital will manage to seal an agreement, and Kioxia could instead opt for an initial public offering it had previously been planning, or take a different path. Kioxia was set to IPO in August 2020, but this was called off due to the pandemic and issues with US-China trade restrictions.
Any such merger would also need to be approved by the Japanese government before it would be allowed to go ahead, and governments around the world are becoming increasingly concerned about foreign takeovers of tech companies.
Reuters now reports that Japan is ready to back to the deal if key technologies stay inside Japan. According to Reuters, the tie-up could give Japan greater leverage in geopolitical rivalries increasingly dominated by technology, including over shortages of chips. It could also help Japan forge deeper semiconductor industry ties with its U.S. ally, a commitment that President Joe Biden and Prime Minister Suga made in April 2021.
