Kioxia and Western Digital Merger Talks Said to be Picking Up Pace

[TheLostSwede]

Due to the current lack of demand for NAND flash, the merger talks between Kioxia and Western Digital have picked up pace once again. The two companies have been at it since 2021 and it was reported back in January that the two companies once again wanted to try and combine their NAND production business. According to Reuters, the two have been pushed into the meeting room once again, largely due to the two NAND giants wanting to cut costs in a market where demand for their products isn't what it once was.

Kioxia and Western Digital are the second and fourth largest manufacturers of NAND flash, although all the memory is made in Kioxia's facilities. A merger of the two would create a company that is said to be owned at 43 percent by Kioxia and 37 percent by Western Digital, with current shareholders of the two companies getting the remaining 20 percent. However, a potential merger isn't without hurdles, as it's likely to be scrutinised by both the US and the PRC due to potential antitrust issues, with the combined company owning a third of the global NAND flash market. Kioxia has even shelved plans for a public offering, due to the sluggish demand for NAND flash. Time will tell if the two can come to an agreement, but it doesn't look like the best of times for a merger either.



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[Wirko]

all the memory is made in Kioxia's facilities

I'm aware of that but what's WD's contribution here? They don't seem to develop their own NAND chips.

 

[TheLostSwede]

I'm aware of that but what's WD's contribution here? They don't seem to develop their own NAND chips.

It was a partnership between Toshiba and WD, where I presume, WD put in a lot of money into Toshiba. Then Toshiba turned it's memory business into Kioxia and WD got a part of something, due to earlier investments, but it's not entirely clear what that was, but now the two wants to try and merge whatever that was with Kioxia.

 

[chrcoluk]

I'm aware of that but what's WD's contribution here? They don't seem to develop their own NAND chips.

I think WD had partial ownership with direct investment. Not sure of the exact specifics.

 

[Tomorrow]

I'm aware of that but what's WD's contribution here? They don't seem to develop their own NAND chips.

Does not WD make the controllers, firmware and software while Kioxia handles manufacturing and packaging of NAND itself?

 

[TheLostSwede]

Does not WD make the controllers, firmware and software while Kioxia handles manufacturing and packaging of NAND itself?

Apparently not, WD manages their own production somehow, in Kioxia's fabs. Not quite sure how that works.
I guess that is what WD wants to try and work out with Kioxia though.

 

[Wirko]

Does not WD make the controllers, firmware and software while Kioxia handles manufacturing and packaging of NAND itself?

Nah, they buy both the flash chips and the controller from some "SanDisk".

Western Digital SN570 1 TB Specs

1 TB, TLC, PCIe 3.0 x4, M.2 2280

www.techpowerup.com

(I'm joking, I know who SanDisk was, and the brand apparently is so valuable that it has survived.)

 

[Dragokar]

I really hope this does not go through. I can't stand that all comes down to 2–3 manufacturers.....

 

[Alan Smithee]

This is pretty complicated.

Back in 2012, WD bought HGST which in turn was a merger of Hitachi's and IBM's storage divisions.

Avago (earlier HP and later Broadcom) bought LSI in 2013, then turned around and sold LSI's SandForce SSD controller business to Seagate a year later.

In 2016, Western Digital bought SanDisk to drive their flash business, but SanDisk was a foundry for Toshiba (who invented NAND) and so Toshiba remained WD's main source of NAND by way of SanDisk foundries.

In 2017, Seagate and SK Hynix acquired Toshiba's flash business, but Seagate sold their share two years later back to Toshiba, who renamed the arm Kioxia.

Now WD is looking to merge with Kioxia, who would actually become the larger part of the merged company. Combined they would have 28.8% of the flash market, close to leader Samsung's 33%.

Toshiba (not Kioxia but the original Toshiba) maintains a HDD business which exists because they get free technology from WD under the antitrust agreement from the WD+HGST merger.

Also, in 2020 Intel sold their NAND business to SK Hynix (who got into the storage business by buying Maxtor way back in 1993) and they spun off the brand as Solidigm. SK has at least 20% of the market. Ironically, the QLC part of Intel's business was created by a Micron-Intel partnership so presumably Solidigm partly relies on Micron/Crucial who is the only other large player in flash.

Lexar was spun off from Cirrus Logic and successfully sued Toshiba in 2005 for $380 million for flash memory patent infringement. They were promptly acquired by Micron/Crucial for the patents, who in 2017 sold them to Chinese company Longsys (presumably without key patents).

 

[Wirko]

I really hope this does not go through. I can't stand that all comes down to 2–3 manufacturers.....

Well, in this case it hardly matters. These two can't be called independent manufacturers.

 

[TheLostSwede]

This is pretty complicated.

Back in 2012, WD bought HGST which in turn was a merger of Hitachi's and IBM's storage divisions.

Avago (earlier HP and later Broadcom) bought LSI in 2013, then turned around and sold LSI's SandForce SSD controller business to Seagate a year later.

In 2016, Western Digital bought SanDisk to drive their flash business, but SanDisk was a foundry for Toshiba (who invented NAND) and so Toshiba remained WD's main source of NAND by way of SanDisk foundries.

In 2017, Seagate and SK Hynix acquired Toshiba's flash business, but Seagate sold their share two years later back to Toshiba, who renamed the arm Kioxia.

Now WD is looking to merge with Kioxia, who would actually become the larger part of the merged company. Combined they would have 28.8% of the flash market, close to leader Samsung's 33%.

Toshiba (not Kioxia but the original Toshiba) maintains a HDD business which exists because they get free technology from WD under the antitrust agreement from the WD+HGST merger.

Also, in 2020 Intel sold their NAND business to SK Hynix (who got into the storage business by buying Maxtor way back in 1993) and they spun off the brand as Solidigm. SK has at least 20% of the market. Ironically, the QLC part of Intel's business was created by a Micron-Intel partnership so presumably Solidigm partly relies on Micron/Crucial who is the only other large player in flash.

Lexar was spun off from Cirrus Logic and successfully sued Toshiba in 2005 for $380 million for flash memory patent infringement. They were promptly acquired by Micron/Crucial for the patents, who in 2017 sold them to Chinese company Longsys (presumably without key patents).

You didn't go far back enough, as the Toshiba SanDisk joint venture started in 1999/2000.

https://www.eetimes.com/toshiba-and-sandisk-form-flash-memory-joint-venture/

This makes it all very complicated regardless and I think most of us had forgotten about how long ago it all started.

 

[Dragokar]

Well, in this case it hardly matters. These two can't be called independent manufacturers.

Yes and No. They work and research together for agesa, but still....WD is way to big after they bought Sandisk. No need to get another fully in.