Kioxia Holdings Corp. Chief Executive Hiroo Ota has ruled out the formation of a broader manufacturing arrangement with SK Hynix Inc., citing both regulatory obstacles and the complexity of merging with operations already shared with Sandisk Corp.
In an interview with Bloomberg News, Ota addressed suggestions that Kioxia, SK Hynix and Sandisk could form a three-way production collaboration. "We can’t just say, ’Well then, let’s make it three companies,’" he said, adding that he did not understand what motivated remarks from SK Inc. Chairman Chey Tae-won that touched on the idea. Ota confirmed that the Korean and Japanese memory makers are not engaged in talks about joint production.
Ota also commented on market pricing for memory chips, saying prices have already climbed to a point he considers sufficient. He flagged a desire to prevent further price increases that could damage longer-term demand from artificial intelligence users. The broader industry has seen manufacturers expand capacity to meet larger orders from AI service providers, with memory chip prices reportedly rising by double or triple digits.
Kioxia is a specialist in NAND flash memory chips used for high-capacity data storage. The company and Sandisk are planning to invest in expanding production capacity at their jointly owned facilities in northern and central Japan, with plans exceeding ¥5 trillion, which the article notes is equivalent to $33 billion.
SK Hynix, for its part, has outlined plans for a 54 trillion won expansion of its chipmaking facilities in Korea, equal to $40 billion, and is building an advanced memory packaging facility in West Lafayette, Indiana.
The corporate relationships between the companies include financial and technical links. SK Hynix holds bonds that are convertible into a 14.19% stake in Kioxia. The two firms collaborate on the development of nonvolatile magnetic memory technology, and Kioxia obtains DRAM from SK Hynix for use in some of its solid-state drives.
Summary
- Kioxia’s CEO has dismissed proposals for deeper manufacturing integration with SK Hynix due to antitrust and joint-venture complications.
- The company wants to curb further memory-price increases to protect long-term AI demand.
- Existing ties include convertible bonds giving SK Hynix potential 14.19% ownership and collaboration on nonvolatile magnetic memory; Kioxia sources DRAM from SK Hynix.
Key points
- Corporate and regulatory - Antitrust considerations and the complexity of existing joint operations with Sandisk limit the feasibility of a three-way manufacturing tie-up.
- Market dynamics - Memory manufacturers are expanding capacity to meet AI service provider demand, and prices have risen sharply.
- Industry exposure - The semiconductor, data storage and AI infrastructure sectors are directly affected by capacity plans and price moves.
Risks and uncertainties
- Regulatory risk - Antitrust concerns could prevent consolidation or closer operational alignment among major memory suppliers, affecting strategic options for the companies involved.
- Demand sensitivity - Continued price increases in memory chips could erode long-term demand from AI service providers, according to Kioxia’s stated concerns.
- Public-comment uncertainty - Statements by executives, such as comments from SK Inc. Chairman Chey Tae-won, can create market speculation even when firms report no active discussions, introducing short-term uncertainty for stakeholders.