Kioxia Holdings, the world's second-biggest producer of NAND flash memory chips, has decided to postpone its plans of releasing an initial public offering (IPO) amidst the ongoing US-China trade war. Reportedly, stricter U.S. restrictions on Kioxia’s prominent client, Huawei Technologies, have hindered the outlook for the Japanese firm.
Additionally, Kioxia investors have been skeptic over the smaller than normal size of new shares, which apparently goes over $800 million. As a result, investors are concerned that this funding will not fulfill the company’s investment plans.
Kioxia, which was previously a part of Toshiba Memory Holdings, intended to release its offering price on Monday. If this release be on track, then Kioxia could have gained an estimated valuation of 1.5 trillion yen ($14 billion), making it the largest IPO of this year in Japan.
Speaking on the move, Nobuo Hayasaka, CEO and President, Kioxia, said that even though the company’s IPO drew considerable interest from numerous investors, Kioxia and lead underwriters believed that it is in their prospective or current shareholder’s best interest to not proceed with the IPO offering during the ongoing concerns about a second wave of the pandemic and continued market volatility.
Credible sources had earlier stated that Kioxia will not give up its IPO during this low period and will try to reschedule it by the end of 2020 or the beginning of 2021.
However, some experts predict that Huawei’s concerns with the US regulators would hardly be solved within the upcoming three to four months, thereby raising some questions on the condition of Kioxia’s IPO and its improvement by then.
For the record, smartphone flash memory accounts for almost 40% of Kioxia's sales. Since the enforcement of tighter restrictions on Huawei, Kioxia faced difficulty in establishing a solid business with the Chinese smartphone manufacturer.
Source Credit: https://asia.nikkei.com/Politics/International-relations/US-China-tensions/Japanese-chipmaker-Kioxia-delays-IPO-amid-US-China-tensions