Shares of digital storage company Western Digital (NASDAQ:WDC) rose as much as 10% following media reports that the company is in advanced talks to merge with Japan’s Kioxia Holdings in a $20 billion U.S. deal.
The reported deal comes just months after it was reported that both Western Digital and chipmaker Micron Technology (NASDAQ:MU) were negotiating potential deals with Kioxia.
The deal, which Western Digital will reportedly pay for in stock, could be finalized as early as mid-September, and Western Digital Chief Executive David Goeckeler will likely continue to run the combined company.
A combination of the two NAND flash memory companies would create a firm with 34% market share, equaling leader Samsung Electronics. A Western Digital and Kioxia merger would also capture robust demand driven by new smartphone launches, 5G wireless expansion and the continued work from home trend.
While Samsung currently dominates with over a third of the digital storage market, Kioxia has a nearly 19% share and Western Digital holds 15%. South Korea’s SK Hynix and U.S. firms Micron Technology and Intel are the other large players in the space.
The memory chip industry is already consolidating, with Hynix agreeing to buy Intel’s NAND flash memory business for $9 billion U.S. last year (2020). A Western Digital-Kioxia merger is likely to draw anti-trust scrutiny in several countries, including in the U.S., throughout Europe, and in China.
