What's going on?

US data storage giant Western Digital is in talks to merge with Japanese chipmaker Kioxia in a $20 billion deal, so it�s a good thing they�re already so used to each other�s foibles.

What does this mean?

Western Digital and Kioxia have actually been working together on manufacturing-based research and development projects for a while. That might�ve helped give Western the edge in negotiations over other interested chipmakers � like, say, Micron Technology, which ended up walking away from talks earlier this year.

There�s at least one reason Kioxia appeals to Western: both chipmakers produce the memory chips used in your smartphones and computers, meaning the merger has potential for synergies (tweet this). In other words, they should be able to slash costs or boost revenues by combining various overlapping departments. Western Digital�s shareholders certainly seem optimistic: they sent its stock up 8% following Wednesday�s announcement.

Why should I care?

For markets: A long road lies ahead.
There�s an elephant in the room here: Japanese regulators are bound to raise concerns that some of the country�s tech is winding up in the hands of an American company. No such qualms for the US, which would likely be in a hurry for them to get the deal over the line: the country is keen to boost its chipmaking capabilities to put up more of a fight against China. But it might not want to hold its breath: US chipmaker Nvidia is still waiting to get approval for its proposed acquisition of Britain�s ARM, almost a year after the deal was first announced.

The bigger picture: Patience is a virtue.
Between a flood of new smartphone launches, growing demand for PCs, and the increase in 5G adoption, demand for memory chips has never been higher. Kioxia, then, might be glad it bailed out on plans to list on the stock market last year, when the chipmaker was valued at $16 billion � around 25% less than Western Digital is reportedly offering.