The world’s second largest maker of flash memory chips, Kioxia Holdings Corporation, has postponed their US$3.2 billion initial public offering due to concerns over a second wave of the COVID-19 pandemic and market volatility caused by political tensions between the US and China.
The listing on the Tokyo Stock Exchange would have been Japan’s largest of the year.
“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,” said Nobuo Hayasaka, the CEO and President of Kioxia.
Kioxia, previously known as Toshiba Memory, had planned the listing to take place on Tuesday 6 October at a market value lower than the price that a Bain Capital-led group paid for the company two years ago, US$18.94 billion (2 trillion yen).
“As a company, we make disciplined decisions that are in the best interest of all our stakeholders and we will revisit an IPO at an appropriate time. We are not in a rush,” Mr. Hayasaka added.
According to Reuters, Toshiba intended to return most of the IPO proceeds to shareholders and said it was disappointed in Kioxia’s decision, while Bain Capital declined to comment.
The delay highlights how disputes over trade and technology between Washington and Beijing have cast a shadow over the global chip industry and affected companies across the supply chain, Reuters reported.
The memory chip market is bracing for the impact of tighter US restrictions on Huawei Technologies, which came into force on September 15.
Kioxia has warned the curbs that ban global suppliers from selling chips made using US technology to Huawei without a special licence, could cause memory chip oversupply and drive down market prices.
Tensions are rising between the US and China after the Trump administration ordered the sale of TikTok assets in the country and placed bans on Tencent’s WeChat, leading to tech giants ByteDance and Tencent to select Singapore as a new hub for business.
Image credit: Source