Kioxia Holdings, the world’s third-largest NAND flash memory chip-maker, made its market debut this week, drawing much attention from Korean rivals amid the evolving competition in the chip market driven by the era of artificial intelligence.
Kioxia debuted on the Tokyo Stock Exchange's Prime Market on Wednesday, closing its first trading day 10 percent higher than the offering price. Its market cap stood at 863 billion yen ($5.62 billion).
The initial public offering is expected to provide the Japanese chipmaker with investment funds, enabling it to improve its financial stability and expand research and development and production capacity.
Korean chipmakers leading the global NAND flash chip market are analyzing the potential impacts of the IPO and weighing their options, especially amid concerns that an increased supply of general-purpose memory chips will dent their sales. At the same time, SK hynix is expected to benefit from the IPO, given it is an indirect shareholder of Kioxia.
"As the successor to Toshiba Memory, Kioxia possesses foundational NAND flash technology and was the leading market player before Samsung. With its competitive edge, Kioxia is anticipated to benefit from the IPO in mid- to long-term upcycles," an industry official said.
"The IPO alone is unlikely to lead to immediate changes in market share, though."
According to market tracker TrendForce, Samsung Electronics led the NAND flash memory market with a 35.2 percent share in the July-September period, followed by SK hynix at 20.6 percent and Kioxia at 15.1 percent. US-based Micron Technology and Western Digital Technologies came in fourth and fifth on the list, with 14.2 percent and 10.7 percent, respectively.
The NAND flash market is currently diverging, with growing demand for AI-driven enterprise solid-state drives but sluggish demand for consumer SSDs in personal computers and mobile devices.
A key focus in the NAND market will be whether Samsung Electronics, which maintains a dominant position, chooses to cut production and shift its product lineup toward advanced chips, or engage in a "game of chicken," an industry official said.
For SK hynix, eyes are on how it will utilize its indirect investment in Kioxia to maximize profit. The company is seen as a beneficiary of Kioxia's IPO, as it indirectly holds a stake of around 19 percent in the company through a 4 trillion won investment in a US-Japan-Korea consortium led by Bain Capital.
SK hynix also possesses convertible bonds that allow it to acquire an additional 15 percent stake, potentially raising its total stake to 34 percent. It also has voting rights, though the company does not directly engage in Kioxia's management.
“Following Kioxia’s IPO, SK hynix could recover its initial investment through a partial sale of shares, while maintaining the possibility for strategic cooperation with the company through its remaining stake,” said Kim Dong-won, an analyst at KB Securities. “Against this backdrop, SK hynix is one of the biggest beneficiaries of Kioxia’s IPO.”
SK hynix has not indicated any concrete changes or specific plans regarding its investment in Kioxia.
"It is wise for the company to wait for the right timing," an industry official said, citing unfavorable market conditions.
"The IPO is a positive step in enhancing Kioxia's valuation. But it does not mean SK hynix will have to take action to materialize its investment immediately," the official added.
Kioxia had attempted to go public several times in 2020 and 2021, but failed, with the economy hit by the COVID-19 pandemic. The company then sought a merger with Western Digital Technologies, the fourth-largest NAND flash-maker, but the plan also fell through, with SK hynix reportedly opposing the move.
