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A new IPO in Japan for semiconductors

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The Japanese semiconductor company KIOXIA (formerly Toshiba Memory Holdings) has confirmed plans to list on the Tokyo Stock Exchange in September. By increasing the ransom price, it is anticipated that the sale process will be accelerated. American companies Western Digital (3rd place) and Micron Technology (5th place) have recently sought to acquire KIOXIA. Therefore, this IPO should serve as a path for mergers and acquisitions and market reorganization. Toshiba (40.6%), KIOXIA’s largest shareholder, has expressed willingness to sell after the listing by increasing its value to improve its financial structure.

Kyodo News reported on the 1st that KIOXIA would apply to list on the Tokyo Stock Exchange this month to complete its listing on the Tokyo Stock Exchange in September. According to analysts, a global semiconductor boom has elevated stock prices, enabling the company to go public. As a result of financial difficulties, Toshiba has already sold half its stake in the memory division to a South Korean, US, and Japanese consortium that included Bain Capital, SK Hynix, and Apple in 2018. KIOXIA will be the new name of the company.

SK Hynix invested about 3.7 billion dollars in the Korea-US-Japan consortium. By the time the IPO occurs, SK Hynix will be the third-largest shareholder of KIOXIA, with up to 15% ownership. Insiders in Japan are concerned about such a high stake, claiming that SK Hynix will exercise an increasing amount of control over KIOXIA. Although it is stated that this will take at least 7 years, SK’s aggressive investment moves have recently added to the scenario.

“SK is the eye of the typhoon for the restructuring of the semiconductor memory industry,” the Nihon Keizai Shimbun said in reporting on SK Hynix’s plans to expand its semiconductor consignment (foundry) business. SK Hynix, with its fourth-largest market share, has already taken over Intel’s NAND division (6th) and is poised to leapfrog Intel to second place.

The expansion of SK Hynix’s investment in KIOXIA has been halted for the past seven years, but the rapidly changing semiconductor market is expected to accelerate acquisitions and business partnerships from other Japanese and foreign companies. In early April, Micron (5th) and Western Digital (3rd) announced plans to acquire KIOXIA for $30 billion. By acquiring KIOXIA, Western Digital (3rd) will surpass Samsung Electronics’ market share.

It is possible, however, that the acquisition price would rise after the IPO, limiting the sale. Moreover, as the Japanese government believes the semiconductor industry needs to be rebuilt from an “economic security” perspective, the atmosphere surrounding overseas sales has become more demanding than previously.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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