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Western Digital, a $19-billion U.S. chip company in San Jose, is in advanced talks to merge with Japan’s Kioxia, The Wall Street Journal reported. (See our early coverage in “Competitors Mull Purchase of Chip-Maker Kioxia,” 25 Apr 2021).
Although the talks are well along, Western Digital could still decide to make an initial public stock offering or combine with another competitor, the WSJ noted.
The deal would be the latest in a series of consolidations in the chip industry, as companies seek to scale operations to a rapidly expanding market without taking years to build and equip new plants and train new workers.
Advanced Micro Devices paid $35 billion to buy Xilinx (“AMD Buys Xilink,” 3 November, 2020); Nvidia bought Britain’s Arm Holdings for $40 billion; and Analog Devices picked up Maxim Integrated Products for $320 billion.
Samsung, the world’s largest maker of memory chips, said in July that exploding demand for the chips helped offset weak revenues from cell phone shipments amid a worldwide snarl in supply lines.
TREND FORECAST: Demand for chips is soaring as computers offer more and more features, 5G wireless technology rolls out and spawns a new generation of smartphones and other appliances, and as electric vehicle makers in China, Europe, and the U.S. expand production.
The research, development, and capital cost of entering the chip-making business has become virtually prohibitive. Therefore, existing companies will continue to maneuver for market share by taking over competitors until “consolidation” leaves only a handful of Bigs in the chip-making business.