According to a report from Nikkei, the negotiations between Western Digital's semiconductor memory business and Kioxia Holdings to merge have been terminated. Western Digital, a U.S.-based company, notified Kioxia on Thursday that it would exit the talks after the merger failed to receive approval from SK Hynix, which is an indirect shareholder in Kioxia. Additionally, the companies were unable to agree on the merger's conditions with Bain Capital, Kioxia's top shareholder. Both Kioxia (formerly known as Toshiba Memory) and Western Digital have experienced a decline in earnings due to challenges in the memory chip market. They were seeking capital infusions and other measures to bolster their operations.
Kioxia is presently the third-largest global market shareholder for NAND flash memory, while Western Digital ranks fourth. The proposed merger aimed to create a new entity that would rival market leader Samsung Electronics, with the hope that the larger scale would lead to increased profitability and growth. However, SK Hynix, which had invested about 400 billion yen ($2.67 billion) in the Bain-led consortium that acquired Kioxia from Toshiba, officially opposed the merger. SK Hynix, the second-largest NAND memory company after Samsung, was concerned that the Western Digital-Kioxia merger would harm its position and disrupt partnerships it was exploring with Kioxia.