TSE Kioxia IPO: Profit for SK Hynix, bane for Samsung Electronics?
TOKYO – The deliberate preliminary public providing (IPO) of Japanese reminiscence chip maker Kioxia Holdings Corp. have an effect on its bigger South Korean rivals – Samsung Electronics Co and SK Hynix Inc. as world chipmakers battle to achieve the higher hand in renewed demand for chip reminiscence amid the AI growth.
Kioxia, the world’s No. 3 NAND flash reminiscence maker, on Friday utilized to listing its shares on the Tokyo Inventory Alternate (TSE), probably in October, in what is anticipated to be Tokyo’s greatest IPO this yr.
The IPO is Kioxia’s second try after its bid to go public in 2020 went awry amid a downturn within the chip trade and an escalating commerce battle between the US and China.
The itemizing utility comes after Kioxia and its US counterpart Western Digital Corp. determined to droop merger talks late final yr due partially to the opposition of SK Hynix, which not directly owns a big stake in Kioxia.
Inspired by the rebound of the NAND flash reminiscence market, the Japanese firm is reviving its IPO bid to boost new funds for R&D investments and services and meet up with Samsung and SK Hynix – NAND gamers No. 1 and No. 2 on this planet, respectively.
Kitakami Kioxia plant in northeastern Japan (Courtesy of Nikkei)
BOON FOR SK HYNIX, BANE FOR SAMSUNG?
Analysts mentioned Kioxia’s IPO may negatively have an effect on Samsung and SK Hynix.
With the proceeds from its share sale, Kioxia plans to increase its NAND flash manufacturing capability to satisfy the rising demand for superior storage machine chips from AI purchasers.
Kioxia not too long ago raised the working charges of its plant in Yokkaichi, Mie Prefecture and one other plant in Kitakami, Iwate Prefecture to 100%. The corporate can be investing in changing its manufacturing traces to provide superior eighth and ninth technology merchandise from earlier sixth technology merchandise.
On the identical time, the corporate is anticipated to spend money on the enterprise stable state drive (eSSD) section, which is more and more in demand within the AI age.
“With the funding, Kioxia’s product competitiveness and chip provide quantity will improve. That is unhealthy information for Samsung and SK,” mentioned an trade official.
(Kioxia half possession)
Kioxia posted an working lack of billions of {dollars} final yr. Nevertheless, earnings this yr, posting document quarterly gross sales of 428.5 billion yen ($3 billion) within the April-June interval, had been up 70.6% from a yr earlier, pushed by strong demand for chips used on for information facilities on the again. of the current AI growth.
SK HYNIX MAY SELL DOWN A RELATIONSHIP IN KIOXIA
The Japanese chipmaker was spun off from Toshiba Corp. in 2017, which was acquired by a consortium led by the US non-public fairness agency, Bain Capital, in 2018 and was renamed Kioxia.
SK Hynix, the semiconductor arm of SK Group, additionally invested about 4 trillion received ($3.37 billion) within the consortium, and 1.3 trillion received was used to purchase convertible bonds (CBs) to safe a stake of as much as 15% in Kioxia.
Samsung is attending FMS 2024, the worldwide annual assembly of flash reminiscence chip producers in Santa Clara
At the moment, the consortium led by Bain has a 56.2% stake in Kioxia. Toshiba owns a 40.6% stake and Hoya has a 3.1% stake.
SK Hynix’s stake in Kioxia, by means of the consortium led by Bain, is nineteen%. If its CBs had been transformed into shares, SK’s complete stake would rise to 34%.
Analysts mentioned Kioxia’s IPO may additionally imply a lift for SK Hynix as Kioxia’s itemizing provides the Korean chipmaker a chance to exit its funding.
In accordance with media studies, Kioxia goals to boost not less than $500 million by means of its IPO, reaching a market capitalization of over 1.5 trillion yen ($10.3 billion)
As of the primary quarter, Samsung is the world’s largest NAND flash producer with a market share of 36.7%, adopted by SK Hynix (22.2%) and Kioxia (12.4%).
Write to Jeong-Soo Hwang and Il-Gue Kim at hjs@hankyung.com
In-Soo Nam edited this text.