SK Hynix has ascended to the position of single largest shareholder in Kioxia, Japan’s flagship NAND flash memory company. While the South Korean chipmaker did not acquire the stake directly, the special purpose company (SPC) it funded through convertible bonds has overtaken Toshiba as the top shareholder, securing both indirect influence and symbolic significance.
According to disclosures cited by Bloomberg and Nikkei on August 11, Kioxia reported that Bain Capital’s investment vehicle, BCPE Pangea Cayman2 (SPC2), now holds a 14.19% stake, becoming the new largest shareholder after former parent Toshiba sold down a substantial portion of its holdings. SPC2 is the entity in which SK Hynix invested approximately 1.3 trillion won (approximately $919.6 million) via convertible bonds, and is closely tied to the South Korean semiconductor giant.
Toshiba executed a series of seven on-market sales of Kioxia shares from mid-last month through August 3. The divestment reduced Toshiba’s holdings from roughly 82.47 million shares to 77.03 million shares, lowering its stake from 15.10% to 14.06%. Meanwhile, SPC2 maintained its position of approximately 77.4 million shares (14.17–14.19%), edging past Toshiba by roughly 360,000 shares to claim the largest shareholder status.
SK Hynix’s path to becoming the largest shareholder traces back to 2018, when it joined a consortium led by Bain Capital spanning South Korea, the United States, and Japan to acquire Toshiba’s memory business — now Kioxia — with a total investment of around 4 trillion won (approximately $2.8 billion). Of this, SPC1, co-funded with Bain Capital and others, was fully divested in June when Bain Capital exited its investment. However, SPC2, which SK Hynix funded entirely on its own, has been maintained to date.
According to Kioxia’s annual report, SK Hynix holds bonds convertible into “substantially all” of the voting rights held by SPC2. Kioxia itself flagged this right in its annual report as a “risk factor with potential conflicts of interest.” While SK Hynix does not directly own 14.19% of Kioxia, converting the CBs into shares would effectively make it a shareholder with voting power.
However, SK Hynix is unlikely to participate directly in Kioxia’s management anytime soon. Exercising voting rights by converting the CBs into shares would require clearing merger control reviews under competition and antitrust laws in South Korea, the United States, Japan, and other key jurisdictions. The biggest hurdle is seen as pushback from the Japanese government, which is highly sensitive about protecting its domestic semiconductor supply chain. At the time of its 2018 investment, SK Hynix committed to keeping its voting stake below 15% through 2028 unless Kioxia permitted a higher threshold.
Industry observers view the ownership shift as carrying significant symbolic weight. Kioxia is the company that developed NAND flash memory for the first time globally — the original NAND pioneer — and currently ranks third in worldwide NAND market share behind Samsung Electronics and SK Hynix (including its subsidiary Solidigm). With SK Hynix now indirectly holding the largest shareholder position in a key competitor, analysts suggest it could gain a favorable competitive position in any future NAND market restructuring, including potential mergers and acquisitions.
Inside SK Hynix, deliberations are reportedly ongoing over how to leverage the SPC2 investment stake. Even without immediate voting rights, the stake serves both as a strategic tool to keep rival Kioxia in check and as a valuable investment asset. The prevailing industry view is that SK Hynix will likely hold onto the SPC2 CBs for the time being while monitoring market conditions and the evolving regulatory landscape.