(Reuters) - Western Digital Corp is in advanced talks for a potential US$20 billion stock merger with Japanese semiconductor firm Kioxia Holdings Corp, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.
The companies could reach an agreement as early as mid-September, and Western Digital Chief Executive Officer David Goeckeler would run the combined firm, the report said.
The news sent Western Digital's shares up as much as 15% in afternoon trading to a market cap of US$21.45 billion.
Kioxia Holdings Corp, the world's second-largest maker of flash memory chips, last year shelved plans for what would have been Japan's largest initial public offering in 2020. In June, however, financial magazine Diamond said the company was planning an IPO as early as September.
The WSJ report said an IPO is still a possibility should Kioxia fail to reach a deal with Western Digital.
Western Digital and Kioxia did not immediately respond to Reuters requests for comment.
The announcement comes as the global chip industry creaks under the weight of widespread supply shortages and trade disputes between Washington and Beijing, triggering supply chain woes for makers of cars and laptops to home appliances and smartphones.
Formerly known as Toshiba Memory, Kioxia was sold by Toshiba in 2018 to a consortium led by U.S. private equity firm Bain Capital for US$18 billion. Toshiba still owns about 40.6% of Kioxia, according to its 2020 annual report.
(Reporting by Eva Mathews in Bengaluru; Editing by Devika Syamnath)