Kioxia and Sandisk outline plans for memory expansion

Kioxia Holdings Corp and Sandisk Corp plan to spend more than ￥5 trillion (US$31.4 billion) to ratchet up production capacity across Japan, aiming to boost output of a critical artificial intelligence (AI) data center component that is in short supply.

The Tokyo-based maker of NAND flash memory aims to invest that amount over six years, Kioxia chief executive officer Hiroo Ota said yesterday.

It intends to invest ￥1.8 trillion on a new fab in Kitakami alone.

The logo of Kioxia is pictured atop a company facility in Yokohama, Japan, in October 2023.

Photo: AFP

That plant would make the company’s latest high-density 3D flash memory chips designed to help manage massive workflows generated by AI services, people familiar with the matter said.

Kioxia and Sandisk would seek subsidies from the Japanese government, the people said.

The company said in a statement that it is considering constructing new facilities among options to “steadily and sustainably” raise corporate value.

Big tech providers from Alphabet Inc to Meta Platforms Inc are signing multiyear contracts to secure memory and storage for data centers, spurring a flurry of big capital expenditure plans from Kioxia’s South Korean rivals Samsung Electronics Co and SK Hynix Inc.

However, China’s Yangtze Memory Technologies Co (長江存儲) is gaining market share in the lower-margin consumer segment.

Kioxia could easily fund billions of dollars’ of capex with cash on hand, Citigroup Inc analyst Takero Fujiwara said.

A decision would signal that the company has secured long-term contracts indicating robust demand through 2028 at least, Fujiwara said in a note to investors.

“While the company remains cautious on capex, we believe it has demonstrated a willingness to invest when necessary,” he said.

Japan has been extending financial support to chipmakers with factories within its borders, including Taiwan Semiconductor Manufacturing Co (台積電), Sony Group Corp and Micron Technology Inc, aiming to claw back some of the country’s former leadership in semiconductors.

Kioxia, which began shipping its stacked 10th-generation BiCS flash memory chips last month, plans to produce higher-end NAND chips used in data centers at the Iwate site.

Its other major manufacturing base in Yokkaichi, Mie Prefecture, central Japan, would focus on chips for consumer products including smartphones.