Data storage devices and solutions provider Western Digital Corp. (WDC) has teamed up with Kioxia Corporation to jointly invest in phase one of the Fab7 (Y7) facility at Kioxia’s Yokkaichi plant in Japan.
While the construction of the first phase of the facility is completed, the joint venture investment will help with the initial production output, which is expected to begin in the fall of the calendar year 2022. Notably, the move builds on top of the 20-year joint venture partnership between the two.
Management Weighs In
The President and CEO of Kioxia, Nobuo Hayasaka, commented, “ The rapid digitization of societies underpins accelerating use of memory products. We will continue to leverage our technological partnership and economies of scale to develop and produce cutting-edge semiconductor products and achieve organic corporate growth.”
Dr. Siva Sivaram, President of Technology & Strategy at Western Digital, said, “This joint investment in Y7 accentuates our productive and positive relationship with Kioxia, underscoring our substantial global share in memory, the ongoing importance of memory and storage, and our multi-faceted commitment to Japan.”
Impressively, this investment adds a sixth flash memory production facility at the Yokkaichi plant, which also happens to be the largest flash memory production site in the globe.
Analyst Take
Stifel Nicolaus analyst Patrick Ho has reiterated a Buy rating on the stock and upped the price target to $85 from $80.
Overall, the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on eight Buys and six Holds. The average Western Digital price target of $66.57 implies a potential upside of 43.66%. That’s after a 29.7% drop in share price so far this year.
Closing Note
This strategic move, while further solidifying cooperation between the two companies, also underscores an opportune investment at a time when the demand for memory products is skyrocketing. As artificial intelligence becomes ever more omniscient across consumers’ lives, this trend may continue to propel the demand for WDC’s memory offerings.
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