Memory and NAND maker Kioxia plans to IPO and raise $800 million for new facility construction, but what effect going public will have on the larger memory market is still unknown.
To debut on the Tokyo Stock Exchange Dec. 18, Kioxia set its initial public offering at 1,455 yen per share to raise 120 billion yen, or roughly $800 million. Kioxia is looking to raise money to increase its manufacturing capacity to meet flash storage demand and increase cost competitiveness.
This includes increasing the production of its eighth-generation, 218-layer BiCS 3D memory, its latest NAND used in AI workloads.The production will be at Kioxia's Yokkaichi and Kitakami plants, with the funding going toward new equipment and construction costs.
In the last few years, the NAND market was in decline, but demand has shifted, according to Joseph Unsworth, an analyst at Gartner. The second half of 2024 has been more favorable for flash and a better time for Kioxia to go public.
They certainly want to time the market so that there's a period that looks favorable for them. This isn't the first time that they've tried IPO.
Joseph UnsworthAnalyst, Gartner
"They certainly want to time the market so that there's a period that looks favorable for them," Unsworth said. "This isn't the first time that they've tried IPO," he added, referring to Kioxia's intended IPO in 2020, but market conditions and general uncertainty led to a delay.
Market effects of an IPO
Analysts agreed that Kioxia going public won't change the NAND market -- where Kioxia competes with Samsung, SK Hynix, Micron and Western Digital -- at least for now.
"This doesn't change the fundamentals in the near term," Unsworth said.
NAND and memory are both volatile markets that depend on other macroeconomic factors, including the oscillations of flash's supply and demand, he said.
The volatility of the market could garner interest from investors, but won't affect how SSDs are bought by enterprises or sold by vendors, according to Jim Handy, general director and semiconductor analyst at Objective Analysis.
"From the buyer's desk, there will be no change," Handy predicted.
Steve McDowell, founder and analyst at NAND Research, said that while there will be no immediate market change, Kioxia's go-to-market strategy might be different.
"[Going public] will force them to be a little more aggressive with product cycles," McDowell said.
Once a company is no longer private, it has to be more competitive, he said. A successful IPO means an expansion of the company and a more direct comparison with competitors such as Micron, he added.
Rumors persist
Before the IPO, reports that Kioxia and Western Digital would merge have persisted for years. After rumored talks between the two companies fell apart earlier this year, Western Digital decided to split off its HDD business from its flash business, which is reigniting speculation.
That kind of talk will probably continue, helped along by the fact that WD and Kioxia use the same NAND and fabs, Unsworth said.
"If there's going to be a merger that would be as digestible as possible, this would be it," Unsworth said, adding that any potential deal between the two companies would revolve around finances and approval from global entities.
If there is a merger, it would probably not be related to a Kioxia IPO, Handy said. The two companies have an agreement on wafer production that probably won't change, but WD has its eyes on a different set of issues.
"Western Digital is marching toward the separation that they've been talking about for some time," Handy said.
Rumors of mergers and acquisitions tend to increase when the market is down, but the flash market is doing better than it has in the past two years, according to Jeff Janukowicz, an analyst at IDC. While there is a joint Kioxia-Western Digital venture on wafer production, it operates independently of splits or IPOs, he said.
"Could something happen between the companies? Possibly. But I don't think there's any sort of correlation," Janukowicz said.
Adam Armstrong is a TechTarget Editorial news writer covering file and block storage hardware and private clouds. He previously worked at StorageReview.
