Kioxia Holdings, the former Toshiba memory unit, and the world’s second largest NAND flash memory chipmaker has announced that it has postponed its initial public offerings plan amid US-China trade tensions.
According to Nobuo Hayasaka, Kioxia CEO and President, “While we received significant interest from many investors, the lead underwriters and Kioxia do not believe it is in the best interest of current or prospective shareholders to proceed with the IPO at this time of continued market volatility and ongoing concerns about a second wave of the pandemic.” In other words, the company is bracing for the impact of the US sanctions on Huawei alongside the ongoing pandemic.
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As per a Nikkei report, the recent reinforcement of regulations against the Chinese tech giant, Huawei, had also affected the decision for the Japanese company. For those unaware, Huawei is a known client of Kioxia. Furthermore, the IPO itself had also garnered a lot of criticism from investors as the company was planned to list at a value of around 14 billion US Dollars, which would have been Japan’s largest IPO this year. However, the company was only actually offering just over 800 million US Dollars for the initial prospectus, which is nowhere near the funding it requires for its planned investments.
Kioxia has said that it would not give up on its IPO and would reschedule for the end of this year or the beginning of 2021. However, a source close to the matter stated that the “Huawei concerns will hardly be solved in the next three to four months.” 40 percent of all Kioxia sales are contributed by smartphone memory chips, and with the US sanctions taking effect from 15th September 2020, the company will lose a notable customer that made up just under 10 percent of its total sales.
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