Japanese chipmaker Kioxia Holdings Corp. and its U.S. peer Western Digital Corp. have halted merger talks after they found it difficult to gain approval from South Korea's SK Hynix Inc., a major investor in Kioxia, sources familiar with the matter said Friday.

The two companies were expected to agree on the merger by the end of the month, a move that would have created the world's leading producer of memory chips for PCs and smartphones. The sources said they may resume talks later, though it is uncertain how the deal will end.

The two companies had planned to set up a holding company to integrate their operations of producing NAND flash memory chips and list the new company on the Nasdaq stock exchange in the United States, according to the sources.

The South Korean chipmaker said Thursday that it is opposed to the merger plan. SK Hynix, which also makes NAND memory chips, could feel threatened as the merged entity would be a major rival in the industry, experts say.

Currently, Kioxia and Western Digital jointly operate plants in Japan's Iwate and Mie prefectures.

==Kyodo

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