Japanese NAND flash giant Kioxia announced today (August 1st) that the building construction of Fab2 (K2) of its Kitakami Plant in Iwate Prefecture was completed in July. As demand is recovering, the company will gradually make capital investments while closely monitoring flash memory market trends. Kioxia plans to start operation at K2 in the fall of Calendar Year 2025, according to its press release.

A portion of investment for K2 will be subsidized by the Japanese government according to the plan approved in February 2024, according to Kioxia.

In addition, the company notes that 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.

According to a report from Nikkei on July 31, Kioxia’s Kitakami Plant started production in 2020,with the construction of K2 began in 2022. Initially, K2 was scheduled to commence production in 2023.

However, due to a downturn in the memory market and weak demand for NAND Flash used in smartphones and PCs, Kioxia started to reduce production in October 2022, with the extent of production cuts exceeding 30%. As part of these production reduction measures, Kioxia postponed the production start of the K2 facility.

Nikkei’s report further indicates that with market conditions recovering, Kioxia ended its production cuts in June 2024, and the current production line utilization rate has returned to 100%.

To mass-produce advanced memory products, Kioxia, in collaboration with Western Digital (WD), plans to invest a total of 729 billion yen in the Yokkaichi and Kitakami plants, with the Japanese government providing up to 243 billion yen in subsidies.

The Kitakami plant will produce the most advanced “8th generation” memory, with a monthly production capacity of 25,000 wafers. These will be used in AI data centers, as well as in smartphones, PCs, and automotive applications.

On June 26, according to industry sources cited in a report from Reuters, Kioxia plans to submit an initial public offering (IPO) application to the Tokyo Stock Exchange in the near future, aiming to go public by the end of October. Sources indicate that Kioxia will submit its official IPO application by the end of August, with a target listing date at the end of October.

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(Photo credit: Kioxia)

To revitalize its domestic semiconductor chip industry, Japan has launched several measures in recent years, including financial subsidies. According to Japanese media reports, many Japanese companies will invest JPY 5 trillion (Around USD 30.96 billion) to develop the semiconductor business.

Nikkei Asia reported on July 8 that eight Japanese companies, including Sony, Mitsubishi Electric, Rohm, Toshiba, Kioxia, Renesas, Rapidus, and Fuji Electric, will invest JPY 5 trillion in the semiconductor field by 2029, driven by the promising prospects of AI, EV, and carbon reduction markets.

As per Nikkei News, based on the capital investment plans from the fiscal 2021 to 2029 of these manufacturers, in order to rejuvenate Japan’s domestic chip industry, these companies will increase their investments in power semiconductor, sensor, and logic chip fields, which are seen as core technologies to the burgeoning sectors such as AI, decarbonization, and EV.

Among these, Sony plans to invest about JPY 1.6 trillion from fiscal 2021 to 2026 to ramp up its CMOS image sensor production capacity. Sony is a globally renowned image sensor manufacturer, and its chip business head, Terushi Shimizu, previously predicted that Sony’s market share in the global image sensor market would reach 60% by the new fiscal year starting April 2025.

In December 2023, Sony held a completion ceremony for the expansion project at its Nagasaki Technology Center (Isahaya City, Nagasaki Prefecture), which produces image sensors. Sony also announced the plan to build a new image sensor production plant in Kumamoto Prefecture, matching the need to expand the Nagasaki plant to improve its supply system. Nikkei News reported in 2022 that Sony planed to invest several hundred billion yen in the new Kumamoto plant to produce smartphone image sensors, with construction expected to start as early as 2024 and production in 2025.

Toshiba and Rohm, positive about the expanding demand for AI data center and the EV market, project to jointly invest about JPY 380 billion to increase the production of silicon (Si) and silicon carbide (SiC) power semiconductors.

In December 2023, Toshiba announced that it had reached an agreement with Rohm to collaborate on manufacturing power devices. Both companies are expected to make efficiency investment totaling JPY 388.3 billion in silicon (Si) and silicon carbide (SiC) power devices fields, aiming to significantly strengthen their supply capacity and complement each other’s production capabilities.

Rohm plans to build a new plant in Miyazaki Prefecture on Kyushu Island and will allocate JPY 289.2 billion in silicon carbide wafer production. Toshiba will invest nearly JPY 100 billion to set up a cutting-edge 300mm wafer manufacturing plant in Ishikawa Prefecture, central Japan.

Mitsubishi Electric plans to invest JPY 100 billion to build a new factory in Kumamoto Prefecture to produce silicon carbide power semiconductor, expected to commence operation in April 2026. Mitsubishi Electric aims to increase its SiC power semiconductor production capacity to five times the 2022 level by 2026. Mitsubishi Electric President Kei Urishima stated, “We will establish a system capable of rival global leader Infineon.”

In 2022, Renesas announced a plan to invest JPY 90 billion to convert its previously closed Kofu factory into a 12-inch wafer plant to meet the growing demand in the power semiconductor field. On April 11 this year, the factory officially resumed operations. Renesas previously estimated that the factory would start mass-producing IGBT and power MOSFET devices in 2025, doubling the company’s overall power semiconductor production capacity.

As to logic semiconductor industry, Japan’s new semiconductor player Rapidus plans to produce 2nm chip in Hokkaido, with a total investment of JPY 2 trillion, of which the Japanese government decided to subsidize JPY 920 billion. Rapidus plans to start trial production of 2nm logic chip in April 2025 and achieve large-scale mass production by 2027.

To capitalize on the expanding opportunities in artificial intelligence (AI), electric vehicles (EV), and the carbon reduction market, eight Japanese companies, including Sony and Mitsubishi Electric, plan to invest JPY 5 trillion (around USD 30 billion) in semiconductors. According to a report by Nikkei on July 8, this investment is expected to increase the production of image sensors, power semiconductors, logic semiconductors, and other products.

Reportedly, eight Japanese companies, including Sony, are planning to invest JPY 5 trillion in semiconductors by 2029, driven by the optimistic outlook for the AI and carbon reduction markets. The report compiled by Nikkei surveys the equipment investment plans of eight major Japanese semiconductor manufacturers for the period from 2021 to 2029: Sony, Mitsubishi Electric, Rohm, Toshiba, Kioxia, Renesas, Rapidus, and Fuji Electric.

The report indicates that Sony will invest roughly JPY 1.6 trillion from 2021 to 2026 to increase the production of CMOS image sensors and other products, with plans to build a new factory in Kumamoto Prefecture. Additionally, Japanese manufacturers are expanding the production of power semiconductors in response to the growing AI data center and EV markets.

Toshiba and Rohm plan to invest a combined total of around 380 billion yen to increase production of silicon (Si) and silicon carbide (SiC) power semiconductors. Mitsubishi Electric aims to increase its SiC power semiconductor capacity to five times the 2022 level by 2026 and will invest about 100 billion yen to build a new factory in Kumamoto Prefecture. Mitsubishi Electric President Kei Urushima stated that they aim to establish a system capable of competing with its rival Infineon, which is the global leader in the SiC power products.

Reportedly, Japanese semiconductor companies held a 50% global market share in 1988. However, after the 1990s, they lost the competition to Taiwanese and South Korean manufacturers, leading to their withdrawal from advanced process research and development in the early 2000s. By 2017, Japan’s market share had fallen below 10%.

In recent years, the Japanese government has been actively revitalizing the semiconductor industry. In the field of advanced logic semiconductors necessary for AI, the Japanese government has decided to provide up to 920 billion yen in support to Rapidus. Rapidus plans to begin trial production of 2-nanometer chips in April 2025 and commence mass production in 2027.

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(Photo credit: Mitsubishi Electric)

The memory market is showing signs of recovery, with Japanese NAND giant Kioxia ending its production cut for NAND Flash at the end of June this year. The company’s Yokkaichi Plant and Kitakami Plant have resumed full production capacity. However, this move could influence the overall NAND market, impacting downstream memory companies like Taiwanese NAND manufacturers Phison, ADATA, Team Group and Apacer.

Citing industry sources, a report by the Economic Daily News states that with Kioxia’s capacity utilization returning to 100%, competitors like Samsung and SK Hynix may also increase their production to maintain market share. This potential surge in supply could lead to a market downturn.

Kioxia’s return to full capacity in June means that increased NAND chip production could enter the market as early as August or September, affecting the traditional peak season of downstream Taiwanese NAND controller chip manufacturers such as Phison, ADATA, and Team Group.

The report notes that Phison believes that current market conditions show strong demand for NAND chips used in SSDs. With NAND chip prices having returned to pre-pandemic levels, manufacturers are beginning to see normal profits. To compensate for losses in 2023, prices are expected to remain firm, maintaining a positive cycle.

In contrast, ADATA has a more conservative outlook on the market. The severe losses experienced by major global NAND chip suppliers in 2023 have led to an increase in production capacity and sales to recoup last year’s losses. This could result in another supply glut in the market.

TrendForce observes that restrained production increases in the first half of the year led to a rapid rebound in NAND Flash prices, helping manufacturers return to profitability. However, with significant production expansion planned for the second half of the year and retail market demand still weak, wafer spot prices are declining. The drop has been so significant that some wafer prices are now more than 20% below contract prices, making it difficult to sustain future contract price increases.

From a demand perspective, the third quarter will see continued investments in server infrastructure, particularly benefiting enterprise SSDs due to the expanding use of AI. However, consumer electronics demand remains sluggish, and with aggressive production increases by manufacturers in the latter half of the year, the sufficiency ratio of NAND Flash is expected to rise to 2.3% in the third quarter. The blended price increase for NAND Flash is projected to narrow to 5-10% quarter-on-quarter.

Read more

• Q3 Contract Prices of NAND Flash Products Constrained by Increased Production and Lower End-User Demand; Estimated to Rise by 5–10%, Says TrendForce
• [News] Kioxia Reportedly Starts 218-Layer NAND Mass Production in July with Full Utilization in June

(Photo credit: Kioxia)

Japan’s leading NAND flash manufacturer, Kioxia, has reportedly increased its production line utilization rate to 100% as of June and is set to commence mass production of its most advanced NAND flash products in July.

According to a report from Nikkei on July 3rd, Kioxia will start mass-producing its latest NAND flash products at its Yokkaichi plant in July. This move is said to be meeting the rapidly growing data storage demands driven by the proliferation of generative AI. Reportedly, the new NAND flash products Kioxia will produce feature 218-layer 3D flash, offering approximately 50% more storage capacity and requiring about 30% less power for data writing compared to current products.

Per the same report, besides the increasing demand driven by AI, the improvement in the memory market also make Kioxia’s production line utilization rate to return to 100% in June. Previously, Kioxia had been implementing production cuts since October 2022 due to sluggish demand for smartphones, with the reduction scale exceeding 30% at its peak.

In an earlier report from The Register, Kioxia announced a partnership with Western Digital (WD) to invest JPY 729 billion in mass-producing advanced memory products. The new plant, located in the Kitakami plant area, is scheduled to start operations in 2025. The Japanese Ministry of Economy, Trade and Industry will provide a subsidy of up to JPY 243 billion (roughly USD 1.63 billion).

In April 2017, Toshiba spun off its semiconductor business focused on NAND Flash, creating “Toshiba Memory.” This entity was renamed “Kioxia” on October 1, 2019. Toshiba currently holds approximately 40% of Kioxia’s shares.

According to another Reuters’ report on June 26th citing sources,  they have indicated that Kioxia will soon submit an initial application for listing on the Tokyo Stock Exchange, aiming for an IPO by the end of October. Kioxia had been evaluating the possibility of going public to raise funds, and with the recovery of the semiconductor market and a rapid improvement in performance, it has determined that the timing is favorable for an IPO.

The sources cited by Reuters further indicate that Kioxia plans to submit its formal IPO application by the end of August, with the goal of going public by the end of October. To meet this timeline, preparations are being carried out at a faster pace than usual for an IPO. However, depending on progress, the IPO could be delayed until December. The sources also noted that Kioxia’s major shareholder, the American investment fund Bain Capital, plans to sell part of its stake during the IPO to recoup some of its investment.

Read more

• [News] NAND Flash Giant Kioxia Reportedly Plans IPO by Late October amid Market Recovery
• [News] With Memory Market Recovering, Kioxia Has Reportedly Ceased Production Cuts and Secured Bank Lending

(Photo credit: Kioxia)