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Japan’s Kioxia reports Q2 loss, says prices have bottomed out

]KIOXIA gadgets can be seen at COMPUTEX Taipei, one of the world's largest computer and technology trade shows in Taipei, Taiwan, May 24, 2022. REUTERS/Ann/File photo

Kioxia, a Japanese company, revealed on Tuesday that it had lost 100.8 billion yen ($664.5 million) in the second quarter of 2016 due to a decline in the market for memory chips used in PCs and cellphones.

The outcome at Kioxia, previously Toshiba Memory, financed by Bain Capital, is comparable to a loss of 130.8 billion yen three months prior.

Since the COVID epidemic, memory chip manufacturers have been facing a decline in demand due to an abundance of supply on the market and mounting pressure for industry consolidation.

Western Digital (WDC.O) and Kioxia are not in negotiations to merge, as Reuters previously reported, following the announcement by Kioxia investor SK Hynix (000660. KS) that it did not support the agreement.

Combining forces would give the merged business a third of the world market for NAND flash memory, matching Samsung Electronics (005930. KS) and posing a challenge to SK Hynix’s dominance.

Even though Western Digital has already stated that it will spin off its memory division, it is still considering other options that might provide “superior value” to the proposed split.

The semiconductor sector is predicted to benefit from investments in artificial intelligence. Still, it is less confident that the market for NAND flash memory for data storage will revive.

According to Kioxia, selling prices have peaked, and increased shipments of PCs and cell phones are anticipated for the upcoming year.

Despite reporting a quarterly revenue decline, Kioxia attributed the more minor loss to higher average selling prices supported by the weaker yen.

Separately, Toshiba (6502.T), which bought a portion of Kioxia in 2018 after selling its chip business to a Bain-led consortium, reported a net loss of 26.7 billion yen for the second quarter.

Following the private equity company Japan Industrial Partners’ successful $13.4 billion tender bid, the industrial giant is scheduled to go private.

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