Western Digital is negotiating a merger with Kioxia

The American company Western Digital is conducting preliminary negotiations on a possible merger with its partner, the Japanese manufacturer of memory chips Kioxia Holdings. This was reported by Reuters with reference to "a person familiar with the matter." The deal is worth $ 20 billion.

The parties are said to come to an agreement as early as mid-September. The combined company will be led by Western Digital CEO David Goeckeler.

Earlier, the Wall Street Journal reported on the negotiations.

The combined company will be comparable in market share to Samsung Electronics, the market leader in NAND flash memory chips.

According to research firm TrendForce, Samsung now has more than a third of the market, Kioxia nearly 19%, and Western Digital 15%. Other major players are the South Korean company SK Hynix and the American companies Micron Technology and Intel.

"Such a deal would be a defensive but sensible move by Western to strengthen its competitive position in the rapidly consolidating chip market," said Morningstar analyst William Kerwin.

"In the long term, we expect the NAND market ... to consolidate to about the top three players," Kerwin quoted Reuters as saying.

The consolidation process is already underway. Last year, Hynix agreed to buy out NAND production from Intel for $ 9 billion. The deal has already been approved by US and European regulators. It is expected that the rest of the necessary permits will be received by the end of this year. 

The merger between Western Digital and Kioxia may also require approval from US, Japanese and European competition authorities.

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