Kioxia has announced a cautious investment plan, even amidst the soaring demand for AI memory.
Why this conservative stance when the market is booming? It all goes back to the painful lessons from 2022. Back then, massive investment across the industry led to a severe oversupply, causing prices to plummet and profitability to evaporate. Kioxia is determined not to repeat that history.
The current situation is a direct result of a clear causal chain. First, the industry, led by Samsung Electronics' significant production cuts in April 2023, collectively hit the brakes. This industry-wide discipline laid the groundwork for a market recovery.
Second, this supply control led to a historic surge in NAND flash memory prices in the first half of 2026. With prices rising so sharply, aggressively building new factories now could quickly flood the market and destroy the favorable conditions that the industry worked so hard to create.
Third, the memory of the 2022 downturn serves as a powerful reminder. That experience taught Kioxia and its competitors the high cost of a 'chicken game,' where everyone races to expand capacity only to suffer from the resulting price crash. This is why Kioxia is choosing supply discipline over reckless expansion.
Instead of building new plants, Kioxia plans to invest a moderate annual sum of about 470 billion yen over the next three years—a figure lower than the 2022 peak. This capital will be focused on improving efficiency, transitioning to next-generation technology within existing facilities, and securing stable revenue through long-term supply agreements (LTAs) with major customers. Essentially, it's a strategy that prioritizes the quality of profit over the quantity of production.
In conclusion, Kioxia's move is a declaration that it won't be swayed by short-term market heat. It's a calculated decision to maintain market stability and ensure sustainable profitability for the long run.
- Glossary -
- CAPEX: Capital Expenditure, which refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.
- LTA: Long-Term Agreement, a contract with a customer to supply products over an extended period, which helps stabilize revenue and production planning.
- NAND Flash Memory: A type of non-volatile storage technology that does not require power to retain data. It is widely used in SSDs, USB drives, and smartphones.