Western Digital in talks to merge with chipmaker Kioxia in $20 billion deal

Western Digital (Nasdaq: WDC) reportedly is in advanced talks for a $20 billion all-stock merger with Kioxia, the Japanese flash memory chipmaker owned by Bain Capital.

Why it matters: This reflects surging demand for memory chips, driven primarily by 5G expansion and the home office boom. It also could set up a series of global regulatory showdowns, if past semiconductor company merger efforts are any guide.

Background: Bain bought Kioxia via a 2018 carve-out from Toshiba. It tried taking it public in Tokyo last year, with plans to raise more than $3 billion, but bailed due to the pandemic and geopolitical tensions.

• Earlier this year, the WSJ reported that both Western Digital and Micron (Nasdaq: MU) had expressed takeover interest.

The bottom line: "Western Digital has a joint venture with Kioxia for manufacturing and R&D that was set to expire starting in 2027. That agreement appears to have given Western Digital a leg up on Micron, which has a market value of $83 billion and could have more easily pulled off a full takeover. Their existing ties could help make a WD-Kioxia combination more palatable to regulators." — Cara Lombardo & Dana Cimilluca, WSJ