Micron, Western Digital Looking at Possible Deal for Chip Maker Kioxia
March 31 2021 - 6:57PM
Dow Jones News
By Cara Lombardo and Dana Cimilluca
Micron Technology Inc. and Western Digital Corp. are each
exploring a potential deal for Kioxia Holdings Corp. that could
value the Japanese semiconductor company at around $30 billion,
according to people familiar with the matter, as a global scramble
for memory chips used in smartphones and other devices heats
up.
A deal for Kioxia, controlled by private-equity firm Bain
Capital, isn't guaranteed, and it isn't clear how one might be
structured. Should a deal come together, it could be finalized
later this spring, some of the people said.
The Tokyo-based company had been planning an initial public
offering before shelving it in late September, citing the
coronavirus pandemic and market volatility.
An IPO later this year is still a possibility should the company
fail to reach agreement on a deal with one of the suitors, the
people said.
Kioxia is considered a crown-jewel asset in Japan, and -- given
the additional political sensitivities of transferring ownership of
key technology like that in chips -- any transaction would likely
require the blessing of the government there. Washington would also
likely play a role, but a deal could fit with a push by the U.S. to
boost its chipmaking capabilities to increase competitiveness with
China.
Kioxia makes NAND flash-memory chips used in smartphones,
computer servers and other devices. It's become a hot area in part
because of increased demand during the coronavirus pandemic for
personal computers, with people working remotely and distance
learning, as well as gaming and the growing popularity of 5G
smartphones.
That has helped Kioxia's valuation soar since it backed away
from the IPO. It was expecting a valuation then of around $16
billion. Its business had been hit by U.S. export restrictions on
China's Huawei Technologies Co. that threatened to lead to excess
supply and price drops for flash-memory products.
Micron shares have also shot up since then, almost doubling to
give the company a market value of about $100 billion. Western
Digital's shares have surged too, giving the company a valuation of
around $20 billion.
Write to Cara Lombardo at cara.lombardo@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
March 31, 2021 18:42 ET (22:42 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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