According to a report from MoneyDJ, Japan’s major NAND Flash manufacturer Kioxia plans to go public on the Tokyo Stock Exchange by June 2025, leveraging Japan’s newly introduced IPO application process to shorten procedural timelines.

According to the report, Kioxia aims for an IPO within the period from December 2024 to June 2025, using the “S-1 Method” introduced in October 2023 to expedite the listing process. Depending on market conditions, the company is also exploring the possibility of listing as early as December 2024.

The report indicates that Kioxia plans to submit its securities registration statement to the Financial Services Agency on November 8th, targeting a market valuation exceeding JPY 1 trillion (USD 6.5 billion).

According to the report, Japan’s traditional IPO process requires companies to get Tokyo Stock Exchange approval, then file a securities registration statement with the Financial Services Agency before setting an offering price with investors. The new “S-1 Method” allows filing and investor discussions to start before approval, cutting the time to public offering from about a month to 10 days.

According to a report in the Reuters, Kioxia is the first company to use the new rules permitting firms to gauge investor interest prior to seeking listing approval from the Tokyo Stock Exchange. The Reuters report indicates that Kioxia anticipates receiving approval from the bourse in late November, with an indicative share price to be revealed around that time.

The report in MoneyDJ mentioned that previously, Kioxia had filed for listing with the Tokyo Stock Exchange in August, with plans to go public in October. However, due to a downturn in the semiconductor market and inability to secure favorable valuations, the IPO was postponed.

According to MoneyDJ, referencing another report from Reuters, the slow recovery in the memory chip market has led investors to urge Kioxia’s major shareholder, U.S. investment firm Bain Capital, to cut the company’s IPO valuation target from JPY 1.5 trillion to nearly half that amount. This investor pressure caused Bain to drop plans for an October IPO.

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(Photo credit: Kioxia)

As Samsung is reportedly scaling down its foundry and legacy DRAM production, the South Korean semiconductor giant is now said to be planning the sale for its outdated equipment in China, including the NAND Flash facilities in Xi’an, according to a report by the Chosun Daily.

The report notes that the struggling semiconductor giant is gearing up to sell old equipment from multiple front-end and back-end production lines, which could not be sold in a timely manner and have been accumulating due to pressure from Washington.

The equipment set for sale primarily consists of 100-layer 3D NAND machinery, according to the Chosun Daily. Since last year, Samsung has been transitioning its Xi’an plant to 200-layer production processes, the report notes.

According to another report by the Korea Economic Daily, following Samsung’s current mass production of its 286-layer V9 NAND flash chips, the company’s Device Solutions division is targeting the production of vertical NAND with a minimum of 400 stacked layers as early as 2026, which makes the 100-layer 3D NAND machinery outdated.

The Chosun Daily report indicates that the old machines are expected to be sold through local Chinese companies or third parties. Memory giants such as Samsung and SK hynix have traditionally sold their used equipment to external companies through brokers after replacing it with advanced machinery, with China rumored as a major buyer.

It is worth noting that following the U.S. Commerce Department’s ban in October 2022 on exporting advanced semiconductor equipment to Chinese companies, these sales have reportedly ceased. According to the report, under U.S. regulations, equipment used in DRAM production processes of 18nm or below, system semiconductors of 14nm or below, and NAND flash memory of 128 layers or above cannot be exported to China.

However, in order to secure Validated End User (VEU) status from the U.S. government, Samsung and SK hynix have rumored to refrain from selling old equipment, even those not restricted by these sanctions, the report suggests.

Once a company is included in the VEU program, it can export items specified in collaboration with the U.S. Commerce Department without a separate permit process or expiration, resulting in an indefinite waiver of U.S. export control regulations, the report explains.

Despite these concerns, following weaker third-quarter results, Samsung is set to begin extensive organizational restructuring and cost-saving measures by the end of the year. As Samsung is expected to adjust utilization rates and staffing levels on its domestic legacy lines, similar changes are anticipated for its Chinese facilities, according to senior management cited by the report.

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(Photo credit: Samsung)

According to TrendForce’s latest memory spot price trend report, regarding DRAM, the decline in DDR5’s spot prices has been relatively modest, while DDR4 and DDR3 products experience more significant pressure. As for NAND flash, spot prices could continue to fall also due to the possible expansions of wafer provision from suppliers at the end of the year. Details are as follows:

DRAM Spot Price:

Regarding DDR5 products, the decline in their spot prices has been relatively modest, but the trading momentum remains sluggish. As for DDR4 and DDR3 products, their spot prices continue to drop due to experiencing more significant pressure. Looking at DDR4’s future spot price trend, demand has been rapidly shifting towards platforms that primarily adopt DDR5. Consequently, clearing existing DDR4 inventories in the spot market is challenging, and the downward price trend is expected to persist for a considerable period. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has fallen by 2.33% from US$1.887 last week to US$1.843 this week.

NAND Flash Spot Price:

Transactions have been sluggish after the conclusion to the peak period of purchase momentum, and market rumors of production cuts among suppliers have proven to be ineffective towards halting the deterioration of spot prices that could continue to fall also due to the possible expansions of wafer provision from suppliers at the end of the year. Spot prices of 512Gb TLC wafers have dropped by 2.66% this week, arriving at US$2.380.

Though having abandoned its initial IPO plan in October due to lower market valuation, Kioxia asserts its optimism on NAND. According to a report by Reuters, the Japanese memory giant anticipates flash memory demand to grow approximately 2.7 times by 2028, fueled by the surge in artificial intelligence applications.

According to the report, Kioxia is preparing a significant capacity expansion at its new facility in Kitakami, Iwate Prefecture, in northern Japan, which was originally set to begin operation last year. Amid challenges due to a downturn in the memory chip market, the start date has reportedly been postponed to autumn 2025.

Kioxia announced in a press release that the building construction of Fab2 (K2) of its Kitakami Plant was completed in July. In addition, some administration and engineering departments will move into a new administration building located adjacent to K2 beginning in November 2024 to oversee the operation of K2.

Citing Tomoharu Watanabe, Kioxia’s executive vice president, the Reuters report notes that in addition to the sufficient capacity Kioxia has at Yokkaichi, Mei Perfecture, Kioxia’s Kitakami factory is set to begin operations next autumn, and the company expects to have ample space to meet demand.

According to a previous report by The Japan Times, Japan’s industry ministry will provide up to 242.9 billion yen (USD 1.64 billion) in subsidies to support Bain Capital-backed Kioxia and Western Digital in expanding memory chip production facilities in Mie and Iwate prefectures.

In July, the company began sample shipments of its newest generation of NAND flash memory, according to the report. In October, it also begun mass production of the industry’s first Universal Flash Storage Ver. 4.0 embedded flash memory devices with 4-bit-per-cell, quadruple-level cell (QLC) technology.

Kioxia achieved revenue of 428.5 billion yen (about USD 2.75 billion) in the first quarter of fiscal year 2024, ending June 30, reflecting a 33% increase from the prior quarter and setting a new record for quarterly revenue.

According to TrendForce, in the NAND Flash market, Kioxia ranked third in revenue in the second quarter of 2024, with a 13.8% market share, after Samsung (36.9%) and SK Group (22.1%).

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(Photo credit: Kioxia)

As South Korean memory giants Samsung and SK hynix announced their third quarter financial reports, posting a 112% and 94% year-over-year revenue growth, respectively, the threat from increasing output of Chinese rivals such as CXMT, which drives prices down, has reportedly prompted them to significantly cut back on legacy memory chip production, according to the report by the Korea Economic Daily.

According to the report, China’s ChangXin Memory Technologies (CXMT) has been ramping up the production of older chips like DDR4 and LPDDR4X, resulting in severe price pressure in legacy products.

CXMT has expanded its monthly DRAM production capacity from 40,000 wafer sheets in 2020 to 160,000 sheets. This capacity is expected to reach 200,000 sheets by year-end and 300,000 by the close of 2025, the report said.

SK hynix to Reduce DDR4 Production to 20% of Total DRAM Output

Industry sources cited by the report noted that in a recent investor relations session with Goldman Sachs, SK hynix suggested that it plans to reduce DDR4 DRAM production to 20% of its total DRAM output by the end of the year, down from 30% in September and 40% in June.

On the other hand, according to the report, in an earnings call with analysts on last week, Kim Jae-joon, executive vice president of Samsung’s device solutions (DS) division, confirmed plans to reduce production of legacy DRAM and NAND flash chips, aligning with industry expectations that chipmakers are scaling back on conventional memory output.

HBM and eSSD Emerge as the New Focus

Instead, both memory giants highlighted in their earnings call that they would shift their focus to highly profitable premium products like HBM and enterprise solid-drivers (eSSDs).

These adjustments by Samsung and SK hynix align with strong server DRAM demand driven by major tech firms like Google and China’s Baidu investing in server infrastructure, while PC DRAM sales have remained stagnant, according to the Korea Economic Daily.

According to SK hynix, as generative AI is developing into a multi-modal1 form and global big tech companies continue to invest to develop artificial general intelligence (AGI), the demand of memory for AI servers such as HBM and eSSD has grown noticeably this year. SK hynix predicts that this trend will continue next year.

According to the Korea Economic Daily, anticipating a prolonged global over supply, SK is accelerating the upgrade of its older DRAM lines in Wuxi, China, to advanced lines for producing fourth-generation 10-nanometer 1a DRAM.

While maintaining steady NAND flash production, in the meantime, SK is increasing the operation rate at its eSSD facility in Dalian, China, to nearly full capacity, according to sources cited by the report.

On the other hand, Samsung noted that in 2025, the company plans to expand the sales of HBM3E and the portion of high-end products such as DDR5 modules with 128GB density or higher for servers and LPDDR5X for mobile, PC, servers, and so on.

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(Photo credit: SK hynix)