Kioxia delays IPO amid rising US-China tensions

Earlier this month, the world’s second-largest maker of NAND flash memory chips set a tentative price range for an IPO in Tokyo to raise £2.3bn

The world’s second-largest maker of NAND flash memory chips, Kioxia is considering delaying Japan’s biggest initial public offering (IPO) as tensions between the United States and China ramp up.

Earlier this month, the company which spun out of Toshiba Corp (TOSBF) in 2018, set a tentative price range for an IPO in Tokyo to raise as much as $2.9bn (£2.3bn).

Toshiba has retained roughly 40% of Kioxia, with the rest held by a group of Japanese, US and South Korean investors.

The Japanese chipmaker was due to reveal its final pricing on Monday, instead Kioxia’s board is reportedly meeting on Monday to discuss its options, according to the Financial Times.

Kioxia had planned to list on the Tokyo Stock Exchange (JPXGY) on 6 October, at a valuation of more than $14bn (£10.86bn). The company warned tighter restrictions could cause memory chip oversupply and drive down market prices.

The company was previously caught in the crosshairs of the US-Sino trade war after Trump imposed tighter restrictions on its client Huawei. Trump’s move sent Huawei’s relations with other countries in a downward spiral, including with the UK, which has banned the Chinese company from building its 5G network.

On Friday, the US commerce department imposed sanctions on China’s biggest chipmaker Semiconductor Manufacturing International Corporation (SMIC), warning exporters that there is an “unacceptable risk” equipment supplied to SMIC could be used for military purposes.

The export controls require suppliers of certain SMIC equipment, to apply for individual export licences.

It comes after, China announced sweeping powers to curb trade, investment and operations of foreign firms deemed “unreliable” on a blacklist, in a retaliation against punitive US actions towards Chinese businesses, such as Huawei.

A move which upped the ante in China’s ongoing trade war with the Trump administration.

The blacklist, targets foreign firms and individuals violating normal market transactions in the country — interrupting deals with Chinese firms — or taking discriminatory measures against Chinese companies.

Firms that end up on the blacklist could be banned from investing in China or importing or exporting in China. Other actions, include entry restrictions on workers entering the country, revoking work or residence permits and imposing fines.