⚠ A Rival With Your Cost Base Is a Rival Who Never Goes AwayHigh threat

Kioxia Holdings (285A) — threat to the moat

A commodity market normally consolidates by squeezing out the highest-cost producer; here the second-closest rival has the same cost base by construction.

The usual way a commodity market consolidates is that the highest-cost producer stops. That route is closed here.

NAND revenue share, Q1 202629%Samsung18%SK hynix14%Kioxia13%Sandisk13%Micron13%YMTCThe 2023 merger that would have combined the green and red bars died on a shareholder veto.
A commodity market usually consolidates by squeezing out the dearest producer. Not here.

Because Sandisk sources substantially all of its flash from ventures it co-owns with Kioxia and built on jointly owned technology1, its cost per bit is not materially worse than Kioxia's. A competitor with your cost base does not get squeezed out in a downturn — it survives every price war you survive, and takes its share of the market on the way through.

That is the structural reason NAND has six participants and DRAM has three: two of the six are effectively one manufacturing organisation wearing two commercial faces, and neither can eliminate the other.

The consolidation that would fix it has been attempted. A merger of Kioxia with Western Digital's flash business collapsed in October 2023 when SK hynix, an investor in Kioxia, declined to approve it2. SK hynix has since disposed of that position entirely3.

The thing to watch is whether the two attempt it again. The shareholder who blocked the last one is gone, and the strategic logic has not changed.

References
  1. ReportedSubstantially all of Sandisk's flash comes from ventures it co-owns with Kioxia, built on jointly owned technology.
    Sandisk Corporation, Form 424B4 prospectus (SEC, CIK 2023554) — Sandisk and Kioxia operate three business ventures, Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd. (collectively 'Flash Ventures'), across seven flash-based manufacturing facilities in Japan, six in Yokkaichi and one in Kitakami, with an eighth beginning operations in calendar year 2025. 'We co-develop flash technologies (including process technology and memory design) with Kioxia for Flash Ventures' use. We and Kioxia jointly own these co-developed flash technologies.' 'Substantially all of our flash-based memory is obtained from our joint ventures with Kioxia... While substantially all of our flash memory supply utilized for our products is purchased from these ventures, from time to time, we also purchase flash memory from other flash manufacturers.' Sandisk names Kioxia, Micron, Samsung, SK Hynix and YMTC among its competitors, and completed its separation from Western Digital in February 2025. — FY2025 · publ. 2025-05 · source ↗
  2. ReportedThe Kioxia–Western Digital flash merger collapsed in October 2023 when SK hynix, an investor in Kioxia, declined to approve it.
    TechCrunch — 'Memory chip maker SK Hynix, a shareholder of Kioxia, opposes a merger with Western Digital', 26 October 2023. After more than two years of talks, Western Digital notified Kioxia that the proposed combination of its flash business with Kioxia would not proceed, citing the failure to obtain approval from SK hynix, a significant investor in Kioxia through the Bain Capital-led consortium, which had invested more than US$2.6 billion and objected that the transaction would undervalue its stake. — October 2023 · publ. 2023-10-26 · source ↗
  3. Third-party estimateSK hynix has since disposed of its Kioxia position entirely, booking about ₩63.3 trillion of gains.
    Korea JoongAng Daily — SK hynix posted record second-quarter profit on AI demand while the shares slid on growth doubts. Net profit of 93.92 trillion won included about 63.3 trillion won of investment asset gains, recognised after the closing of the disposal of its Kioxia stake in June; SK hynix had held the position since 2018. — Q2 2026 · publ. 2026-07-30 · source ↗
Sources
Generated September 23, 2026