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Breaking: SK Hynix Throws a Curveball and Opposes Merger with Western Digital – What This Means for the Memory Chip Industry
In a surprising turn of events, SK Hynix, a major player in the memory chip industry, has voiced its opposition to the long-awaited merger between Western Digital and Japan’s Kioxia. This unexpected move has thrown a wrench into the plans of creating the world’s biggest NAND flash memory maker, with far-reaching implications for the industry.
The announcement came during SK Hynix’s recent earnings call, where the company’s chief financial officer, Woohyun Kim, stated that they “will not agree to a combination of the two players” due to concerns over the impact on the value of their investment in Kioxia. This statement is significant because it adds fuel to the merger negotiations, which have yet to be officially confirmed by Western Digital and Kioxia.
While the exact reasons behind SK Hynix’s opposition remain confidential, Kim emphasized that the company is committed to making decisions that consider all stakeholders, including shareholders and Kioxia. This development adds another layer of complexity to an already intricate situation involving stiff competition from China, Samsung, and now SK Hynix.
Rumors of a potential merger between Western Digital and Kioxia have been circulating since 2021, and the two companies have already been working together in a joint venture since 2022. Reports suggested that the announcement of their deeper tie-up was imminent. However, with SK Hynix’s opposition, it remains unclear how this will impact the negotiations.
In their pursuit of financial support for the potential merger, both Western Digital and Kioxia have been engaging with top Japanese banks, including Sumitomo Mitsui Financial, Mizuho Financial, Mitsubishi UFJ Financial, and the Development Bank of Japan. Additionally, Kioxia has reportedly approached Japan Investment Corp for further backing.
Ultimately, the success of the merger depends on obtaining approval from both companies’ shareholders. On top of that, navigating the regulatory landscape across various markets, including China, poses further challenges.
This unexpected opposition from SK Hynix has rattled the memory chip industry and introduced a new level of uncertainty. As the story unfolds, industry players and investors await further updates on the future of this potentially groundbreaking merger.
