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US chip bulk-up adds heat on Korean chipmakers to keep up competitiveness

According to Pulse by Maeil Business News Korea,

American chipmakers’ bulking-up through massive expansion and M&A to better chip self-sufficiency could benefit Korean chipmakers with dominance in the memory market in the near term but could intensify cut-throat war to stay ahead in technology upgrades and capacity buildup.

On the heels of Intel’s $20 billion investment plan, the Wall Street Journal reported that Micron Technology and Western Digital Corp were each exploring a potential deal for Japan-based Kioxia Holdings with valuation at around $30 billion.

Kioxia, formerly Toshiba Memory, is a cash cow business that cash-strapped Toshiba put out in the market in 2017. It owns the origin of NAND flash memory, a data saving device of smartphones, computers, and servers.

If the sale falls through, Kioxia could opt for an initial public offering, the paper said.

In September 2017, a majority 59.8 percent of Toshiba’s memory chip unit was sold to a multinational consortium led by U.S. equity firm Bain Capital and technology giants SK hynix, Apple, Dell, and Seagate, and Japan’s public-private partnership fund The Innovation Network Corporation of Japan. Now, the consortium owns 59.37 percent stake in Kioxia. Total sales price at the time amounted to $18 billion, in which SK Hynix put up 14 trillion won ($3.5 billion).

Kioxia integration into U.S. players simplifies the flash market competition and brings immediate capital gains for SK Hynix. Kioxia is No. 2 in flash market with 19.5 percent.

SK hynix stands at No. 4 in the NAND flash memory ranking with 11.6 percent share, behind WDC with 14.4 percent and a tad ahead of Micron with 11.2 percent. It is poised to leapfrog to No. 2 after completing its acquisition of Intel’s NAND business, current commanding 8.6 percent in the flash market.

With Kioxia under its arm, U.S. names Micron or WDC emerge as formidable challenge even to market leader Samsung Electronics, which lately became behind upscaling race after Micron announced to mass produce world’s first 176-layer V-NAND flashes. Samsung Electronics held 32.9 percent share in the global NAND market as of December,

Catching up in the system semiconductor market also has become tying after No. 1 foundry TSMC vowed to invest $100 billion over the next three years to boost advanced semiconductor manufacturing and research and development capacity. Samsung Electronics has not made upgrades on its capex plans with its leaders behind bars.

Shares of Samsung Electronics closed 2.29 percent higher at 84,800 won on Friday and SK hynix 0.36 percent up at 141,000 won.

By Lee Jong-hyuk, Jin Young-hwa, and Lee Eun-joo

Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.

Source: Pulse by Maeil Business News Korea (Apr 2, 2021)

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