Shulou(Shulou.com)11/24 Report--

CTOnews.com, July 16 (Xinhua)-- Western Digital and Kioxia are about to reach an agreement after months of negotiations, Bloomberg reported. The agreement will involve spinning off and merging Western Digital's NAND flash business.

Details of the merger remain secret, but sources say Western Digital shareholders will control slightly more than half of the combined company. This was rejected by Japan's Kyodo news agency, which said the armor would dominate the new company after the merger.

However, the source also mentioned that it was suggested during the negotiations that Armour's executive team should be allowed to dominate the day-to-day management of the new company after the merger, but that Western Digital executives would also play an important role.

▲ source: according to the current situation, although the negotiations between the two sides are progressing smoothly, it may take some time for the two sides to finalize the agreement, during which time they may change their mind or even end up failing to reach any agreement.

It is said that the combined new company will adopt a dual board representation system, and both chipmakers will be members. The new company will be based in Japan and will be listed on NASDAQ and Tokyo, while Bain Capital, the main investor in Armor, will receive a special dividend.

Earlier, Reuters reported that Che Xia would contribute 43 per cent of the combined company and 37 per cent of Western Digital, with the remaining 20 per cent owned by existing shareholders such as Toshiba, and the new company plans to list on the Tokyo Stock Exchange in the future.

CTOnews.com Note: the armor was born out of Toshiba, the "father of flash memory". Although both Xisu and Xia wafer factories are producing 3D NAND, they each maintain different business strategies. Armour's main focus is on memory chips, while Western Digital tends to supply NAND-based products, that is, SSD products.

As of the first quarter of 2023, Knight had 21.5% of the NAND memory market, while Western Digital had 15.2%. Samsung, on the other hand, had a 34% market share over the same period. As a result, the potential entity after the merger of the flash business of Shexia and Western Digital will become the leading supplier of NAND memory in the global market, with a market share of more than 36.7%.

It was previously reported that the combined company's revenue is expected to overtake Samsung to become the world's largest manufacturer of NAND memory. Due to the deteriorating market conditions and poor performance of storage products used for purposes such as smartphones, the two sides hope to merge to improve operational efficiency. The report quoted people familiar with the matter as saying that the merger will further negotiate details such as the proportion of capital contribution when the armor is in the lead.

▲ source: according to the data of Omdia, the market share of Knight-errant and Western Digital ranked 3rd and 4th in 2022. The combined NAND memory revenue is expected to reach 2.5 trillion yen (currently about 126.75 billion yuan), surpassing Samsung Semiconductor, the leader in the NAND industry.

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