SK Hynix Becomes Kioxia's Largest Shareholder, Japan's Largest NAND Manufacturer Changes Hands
After Toshiba repeatedly reduced its holdings, SK Hynix's stake in Kioxia held through a special purpose vehicle rose to 14.19%, surpassing Toshiba to become the largest shareholder. However, this holding is currently in the form of convertible bonds, so SK Hynix does not yet have direct voting rights. Whether it can convert the bonds and expand its influence in the future depends on factors such as antitrust review and Japanese policies
Toshiba's continued reduction of its stake in Kioxia has unexpectedly changed the latter's Equity Structure.
According to a report by Nikkei on the 10th, SK Hynix's indirect stake in Kioxia held through a special purpose vehicle has risen to 14.19%, exceeding Toshiba's 14.06% to become Kioxia's largest shareholder.
However, becoming the largest shareholder does not mean that SK Hynix has gained operational control over Kioxia. Since the current holding is still in the form of convertible bonds (CB), SK Hynix has not yet obtained the corresponding direct voting rights; whether it can convert the bonds and further expand its influence in the future also depends on regulatory approvals and other factors.
Toshiba Reduces Holdings Seven Times, Largest Shareholder Changes Hands
According to reports, Toshiba previously held a 15.10% stake in Kioxia. After seven consecutive reductions from July 15 to August 3, its shareholding ratio dropped to 14.06%.
Meanwhile, "BCPE Pangea Cayman2" (SPC2), the special purpose corporation used by SK Hynix to invest in Kioxia, holds a 14.19% stake, thereby surpassing Toshiba to become Kioxia's largest shareholder.
SPC2 is one of two special purpose vehicles established by SK Hynix when it participated in Kioxia's investment in 2018. At that time, SK Hynix invested approximately 1.3 trillion Korean won in Kioxia through SPC2 in the form of CBs. The other investment vehicle, SPC1, completed its share sale in June this year as Bain Capital exited, making SPC2 currently the sole channel for SK Hynix to hold interests in Kioxia.
CB Conversion is Key to Enhancing Influence
Currently, SK Hynix's interest in Kioxia is mainly reflected as a financial investment, and it has not yet obtained the voting rights corresponding to common shares through CB conversion.
If the conversion is completed in the future, SK Hynix will obtain direct voting rights, and its influence on Kioxia's operational decisions is expected to further increase. But this process is not without obstacles.
As the world's second-largest NAND manufacturer, the equity relationship between SK Hynix and Kioxia, the world's third-largest NAND manufacturer, may be subject to scrutiny under major market competition laws and Antitrust regulations. Meanwhile, as an important semiconductor enterprise in Japan, changes in Kioxia's equity structure also involve Japan's policy considerations regarding the key semiconductor industry chain.
New Variables Added to NAND Competitive Landscape
Kioxia is Japan's largest NAND manufacturer and ranks third in the global NAND market, trailing only Samsung Electronics and SK Hynix. Although this change in Equity Structure is unlikely to alter the industry's competitive landscape in the short term, it has increased the strategic attention paid to the equity relationship between SK Hynix and Kioxia.
In 2018, SK Hynix invested a total of approximately 4 trillion Korean won in Kioxia through two special purpose vehicles. With the exit of SPC1 and SPC2 becoming the sole holding channel, coupled with its unexpected emergence as Kioxia's largest shareholder, the strategic significance of this investment has once again attracted market attention.
Whether the subsequent CBs will be converted, whether SK Hynix can obtain voting rights, and the attitudes of Japanese and other regulatory bodies will determine whether this equity relationship can evolve from a financial investment into deep industrial-level synergy.
