Japanese chipmaker Kioxia to delay IPO amid US-China tensions

Sep 28, 2020 | News On Japan

Sep 28, 2020 (Nikkei) - Former Toshiba memory unit Kioxia Holdings, the world's second-largest maker of NAND flash memory chips behind Samsung Electronics, will postpone plans for an initial public offering, Nikkei learned on Sunday.

Tighter U.S. restrictions on China's Huawei Technologies, a Kioxia client, had clouded the outlook for the Japanese company. Investors had also expressed skepticism at the smaller-than-expected size of new shares to be issued -- just over $800 million, according to the initial prospectus -- saying it is a far cry from what is needed to fund its investment plans.

Kioxia, formerly Toshiba Memory Holdings, was planning to announce its offering price on Monday. If the shares had debuted on Oct. 6 on the Tokyo Stock Exchange as scheduled, the company was expected to list at a valuation of 1.5 trillion yen ($14 billion) and would have been Japan's largest IPO this year.

Sources familiar with the matter told Nikkei that the company would not give up its IPO and will try rescheduling it around the end of this year or the beginning of 2021.

But one industry source told the Nikkei Asian Review that "Huawei concerns will hardly be solved in the next three to four months," and questioned whether conditions for an IPO will improve by then.

Flash memory used in smartphones makes up around 40% of Kioxia's sales. The U.S. Department of Commerce's tighter restrictions on Huawei came into force on Sept. 15, and Kioxia has been unable to count on its business with the Chinese company since then. Huawei accounts for less than 10% of Kioxia's sales.

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