September 17, 2019 by Luke James
Toshiba Memory, rebranding as Kioxia Holdings Corporation on October 1st, announced that it had signed an agreement with LITE-ON to acquire its SSD business.
Following on from speculation that emerged in early August, LITE-ON last week confirmed that it has reached an agreement to sell its solid-state drives (SSD) component of its business to Toshiba Memory Holdings Corp, soon to rebrand as Kioxia Holdings Corporation, for US$165 million.
Expected to be completed by April 2020, the sale is a purchase of shares in return for cash and involves all LITE-ON's SSD business operations, assets, equipment, IP, personnel, and commercial relationships, amongst other things.
Whilst the deal is expected to be completed during the first half of 2020, it is subject to closing adjustments and regulatory approval.
In May of this year, for Q1 2019, Toshiba ranked third worldwide for PCIe SSD revenues. Given that Toshiba Memory will now own all Lite-On's SSD brands and everything associated with them, this $165 million investment has the potential to deliver a huge return for the Toyko-based computer memory manufacturing giant.
Toshiba Corporation entrance in Japan. Image credited to Eric G. through Flickr (CC BY-NC 2.0).
Furthermore, in January 2018, LITE-ON signed a joint-venture deal with Tsinghua Unigroup to develop and build SSDs in China. Given that this acquisition provides Toshiba with ownership of any and all things that fall under the LITE-ON SSD asset umbrella, they should also acquire ownership of this 45 percent joint venture interest. If this is the case, the joint venture would provide Toshiba with a source of NAND wafers separate from its current joint venture with Western Digital.
Toshiba Memory's acquisition is a move to bolster its position in the market and strengthen its presence. Nobuo Hayasaka, CEO of Toshiba Memory, said, “LITE-ON’s solid-state drive business is a natural and strategic fit with Toshiba Memory and expands our focus in the SSD industry. This is an exciting acquisition for us, as it positions us to meet the projected growth in demand for SSDs in PCs and data centers being driven by the increased use of cloud services.”
LITE-ON is a supplier of optoelectronics, storage, and various electronic components based in Taiwan. Their first foray into SSDs began in 1995 with a 2008 expansion into PC SSDs and again in 2014 with cloud data SSD development.
Today, LITE-ON provides highly customized and ready-to-deploy SSDs for both enterprise and consumer-level applications. Its customer base stretches the globe throughout America, Asia, and Europe.
Toshiba Memory Group is the foremost leader in computer memory solutions. The group is wholly dedicated to the development and production of SSDs and other memory solutions such as flash memory. In 2018, the group was spun off from Toshiba Corporation conglomerate as a standalone entity.
Toshiba Memory Holdings' IPO is expected to occur at some point during the first half of 2020. It was originally scheduled to occur sooner, however, the US-China trade dispute and the resulting low NAND chip demand has caused a delay.
Toshiba Memory Group will officially change its name to Kioxia Holdings Corporation on October 1, 2019.
