WDC Plan - First hypothesis ....................
As one poster recently put it, what will happen is usually the most obvious.
The most obvious is that WDC needs cash to pay down its debt and to finance its projects.
And, as they already started to reorganise their business by separating HDD from SSD business, the next most obvious is that they will sell one of them.
As you said, 8Tey, they will not sell Sandisk and the SSD (3D-NAND) business, because it is their futur.
So they will sell HGST witch produce essentialy HDD in Thailand, Malaysia and Philippines.
(It seems that HGST also produce SSD, but I was unable to locate their fab).
So the first step is to sell HGST and to collect 5 billions (?) USD to reduce their debt.
If we say that WDC main project is to produce and sell a new non-volatile memory - An essential condition for all this to make sens - then the second step will be to find more cash to finance the first years of industrial production of that new product .
The Optane / 3D-Xpoint experiment shows that the first years are expensive and risky.
WDC will want to share the expenses and the risk.
The most obvious and simple way to do that is to make a new joint venture, with Kioxia inevitably, but also with Micron, to developp this new memory.
They could use Fab 7 in Yokkaichi for that purpose. This Fab is supposed to enter production somewhere in 2022 or 2023. It could become the equivalent of the Lehi fab for 3D-Xpoint.
This fab will probably make an extensive use of EUV equipments wich are very expensive (one unit cost more than 100 millions USD). One could easily imagine that this fab could cost around 15 billions dollars. Probably more.
The Micron money will certainly be most welcome for WDC and for Kioxia.
And those two companies will probably need to ask the market for cash to pay their part.
For that reason, this project will need an important PR campaign to explain what the new WDC will be and what Kioxia will be in the futur.
WDC could then sell bonds and Kioxia will be in the best position for a successful IPO.
They will both need an enthousistic response from the market.
What could happen to 4DS if this plan is the real plan ?
First, WDC , Kioxia and Micron will have to ask for a licence.
WDC could use the licence granted by the JDA with HGST, but what happen to the right to have the licence at a low price (see the JDA) if HGST is sold ?
They will probably find a way, but in any case, if there is a new joint venture to build a new product and if this product is based on 4DS thechnology, Micron and Kioxia will have to pay the full price.
Second, for 4DS, the most important consequence could be the WDC roadshow and pre IPO disclosure by Kioxia.
Both companies will have to shed some light on their projects and even without telling anything about the technology, if they ask for money to developp a new product, analyst will want to know what it is.
In a few weeks or months, 4DS will be exposed.
As an alternative, the three partners could buy 4DS, But if they have to talk about their product and if this product is linked to 4DS, then the cost of buying 4DS could quickly become too expensive.
So, the licence path seems the most obvious if they whant to go fast and spend less.
In a less positive scenario, WDC could just speak about selling the HDD business.
But if all they have to say to the market is "we are going to have less debt", they could do it with only one investor conference. Why five then ?
The market is waiting for something big. Investors will be hugely desapointed and the share price will drop if they just say that they will reduce debt and concentrate on 3D-NAND.
Many insiders and board members have bought WDC shares in recent weeks. There must be a reason.
One last point still remain unresolved in this story. What will happen to HGST ?
It could be bought by the SPAC, but for what amount and for what project ?
Hard Disk Drives - specialy the ones built by HGST - certainly have a futur in the digital revolution. But is that enough to lure investors in the project of an independant HGST ?
Many other forms of reorganisation could eventuate.
- They could sell the HDD fabs and keep HGST as a shell
- WDC could be bought by Micron after selling the HDD business. This one is very interesting on paper. But it will be a merger, witch means years of negociations to get the necessary clarances.
Finally, the joint venture solution seems the easiest way.
And also, 8Tei, I dont believe that WDC wants to buy Kioxia.
They tried once and it was not successful. Too much opposition by the japanse authorities and too much hurdle to have all clearances from China and other jurisdictions.
Kioxia will not be sold, imo.
Bain Capital and their Pangea consortium will get their money back through the IPO.
At this stage, all this is pure fiction. But it is coherent with what we know and what analysts are saying.
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