According to a report, Western Digital is exploring a possible merger with Japanese chipmaker Kioxia. The plan appears to be to subvert their rival, Samsung Electronics.
A report by research firm Trend Force says South Korean tech giant Samsung dominates a third of the NAND market.
While Kioxia has a market share of 19% and Western Digital 15%. The combination of the two companies could generate strong demand for memory chips driven by 5G expansion as well as increased work from home due to the pandemic.
The report revealed that the transaction value was more than US$20 billion.
“The deal would be a defensive but prudent move by Western to strengthen its competitive position in the chip market by rapidly consolidating the chip market,” said Morningstar analyst William Kerwin.
Kerwin himself predicted that there would be only three major players in the industry, with most of them being commodities.
Kioxia Merger with Western Digital in Mid-September
According to sources, a merger agreement is likely to be reached in mid-September. Western Digital CEO David Goeckler was appointed to run the combined company.
Reports about the talks between the two companies were disclosed by The Wall Street on Wednesday (25/8/2021). Meanwhile, both Kioxia and Western Digital said they did not comment on speculation about the merger.
However, it seems that the merger of the two companies is likely to be disputed by anti-trust authorities in a number of countries including the United States and China. Previously, a number of companies had to fail to enter into an agreement because of fears of monopoly and trade conflicts between the two countries.
For example, Qualcomm Inc. canceled a deal to buy NXP Semiconductor for US$44 billion. This comes after the company failed to get approval from China in 2018.
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