Kioxia Holdings Corp. announced Monday it would not move forward with its planned $3.2 billion initial public offering (IPO). The firm wanted to go public via the Tokyo Stock Exchange this October. CEO Nobuo Hayasaka released a statement noting the company is indefinitely delaying its IPO due to “continued market volatility.”
Currently, Kioxia is the world’s second-largest flash memory vendor behind Samsung.
Why Kioxia Delayed Its Multi-Billion Dollar IPO
The Tokyo, Japan-based semiconductor company has not gone into detail about why it indefinitely delayed its IPO.
Kioxia declined to identify the factors that made the global marketplace prohibitively unstable, aside from the coronavirus pandemic. Hayasaka explained he and the firm’s underwriters feared a second wave of the aliment would negatively impact the company.
Recent spikes in coronavirus diagnoses in regions like the United States support the firm’s reasoning.
That said, Kioxia’s call to postpone its IPO also likely involved a recent problem with one of its major clients. Although Apple represented 22.8 percent of its business last quarter, it served as a significant no will supplier for Chinese conglomerate Huawei.
On September 15, the U.S. Department of Commerce tightened restrictions on Huawei’s access to products made using certain U.S. technology. Like other foreign chipmakers, Kioxia will probably comply with Washington’s sanctions to avoid severe financial penalties.
With its visibility obscured for multiple reasons, the memory component company made the right call about not going public.
Second Cancelled IPO
For the second time in as many years, Kioxia scuttled a high profile IPO because of concerns about the global marketplace
In 2018, a consortium led by Bain Capital purchased the Japanese chipmaker, then known as Toshiba Memory, for $18.8 billion. The group sought to receive a return on their investment by taking the rebranded chipmaker public in 2019. But the investment firm pulled the plug on the offering because of weak market conditions.
Kioxia’s leaders saw another opportunity to launch an IPO this year after the coronavirus pandemic bolstered the memory chip market. Ironically, the global health crisis played a part in undoing the firm’s second attempt at going public.
Hopefully, market conditions will improve enough to allow Kioxia to launch its IPO soon. Hayasaka said his firm would revisit the idea of going public when the time is right. The company deserves a chance to become a larger global player.