[CES 2023] SK hynix chief says merger of Western Digital, Kioxia will 'not be easy'

LAS VEGAS -- SK hynix Vice Chairman Park Jung-ho said Thursday the merger of two memory competitors -- US’ Western Digital Corp. and Japan’s Kioxia Holdings Corp. -- "will not be easy," shrugging off the possibility of the two chipmakers' tie-up that could transform the business landscape.

Earlier in the day, Bloomberg reported that Western Digital and Kioxia are considering merging into one publicly traded company, citing unnamed sources. The structure of the potential deal is fluid, the report added.

"The Japanese government is friendly with the United States, but I believe it will not easily approve of the merger of the two countries," Park told reporters as he toured around the SK Group showroom set up at the Consumer Electronics Show 2023 in Las Vegas, which kicked off on Thursday.

According to TrendForce, a market analysis firm, Samsung Electronics topped the sales of NAND flash chips in the third quarter last year, taking the market share of 31.4 percent, as Kioxia followed with 20.6 percent. SK hynix stood third in the list, taking 18.5 percent of market sales, while Western Digital posted 12.6 percent.

In the event of a Kioxia-Western Digital merger, their combine market share of 33.2 percent would beat those of both Samsung Electronics and SK hynix. However, it is not the first time the two chipmakers have discussed a merger. Their previous talks fell through in 2021.

While the memory chips industry faces a downturn from sluggish demand, Park said the grim situation will not last long.

“I believe the slump in the memory chip industry will not last for long,” he told reporters.

As a breakthrough, Park said he is considering expanding the product portfolio into other fields, including mobility and server sectors.

“The major clients buying SK hynix’s semiconductors have been PC manufacturers, but I believe it is important to expand our client group to those in mobile, mobility and server sectors as well. I am holding many meetings (at the CES) for that goal.”

Over the decline of NAND flash prices that have continued for over a year, Park forecast the average selling price will edge down from that of the end of last year.

“(The price rise) would depend on how fast the client sentiment for investment recovers. We are talking with our customers, but macroeconomic trends affect the issue,” Park added.

After his tour of the SK Group showroom, Park also met with Qualcomm CEO Christiano Amon to discuss the overall situation of the semiconductor industry and of their possible collaboration, SK said.

As the world's largest convention of home appliances and technologies kicked off on Thursday, Park and other members of SK leadership made visits to the SK showroom and those of others.

Chey Jae-won, vice chairman of SK Group and brother of the conglomerate's Chairman Chey Tae-won began his tour around the CES venue early on Thursday, together with Cho Dae-sik, the chairman of the SK Supex Council and the second-in-command, Kim Jun, the vice chairman and president of SK Innovation and Choo Hyeong-wook, SK E&S president.

After visiting the SK Group's showroom, Chey also visited the showroom of Samsung Electronics and LG Electronics, where he was greeted by the chiefs of both companies, Samsung's Vice Chairman Han Jong-hee and LG's CEO Cho Joo-wan.

Chey Tae-won had planned to participate in this year's CES, and face-to-face meetings were planned with business partners, but they were all turned to virtual ones after his secretary was confirmed with COVID-19.