Kioxia, SanDisk to invest 5 trillion yen in Japan NAND push as global chip war heats up

As the AI inference era takes hold, demand from AI data centers for high-capacity storage is surging. In step with that trend, Japanese NAND flash manufacturer Kioxia has announced an investment plan worth 5 trillion yen ($31.4 billion). US chipmaker SanDisk, a long-standing joint-venture partner, will participate in the investment.

Kioxia has drawn additional attention after a fund backed by SK hynix recently became its largest shareholder. Toshiba's stake had been declining, and earlier this month a special purpose company set up by Bain Capital rose to the top shareholder position. SK hynix holds convertible bonds issued by that SPC.

Kioxia announced Thursday that it would invest 5 trillion yen in Japan through 2032. The funds will go toward expanding infrastructure at its Yokkaichi and Kitakami plants.

SanDisk has maintained a partnership with Kioxia for more than 25 years, dating back to the company's days as Toshiba. The two firms began exploring NAND production collaboration in 1999 and have since jointly manufactured chips at the Yokkaichi and Kitakami plants in Japan. Over that period, they invested a combined 9 trillion yen to drive the growth of Japan's NAND industry.

Kioxia will cover 60 percent of the new investment and SanDisk the remaining 40 percent. Government subsidies will also underpin the spending, with Japan's Ministry of Economy, Trade and Industry set to provide grants for production facility construction and manufacturing equipment. The Takaichi Sanae cabinet plans to mobilize 68 trillion yen in public and private investment through 2040 to develop the semiconductor industry.

Kioxia will first build a third fab at its Kitakami plant in Iwate Prefecture, on a site south of the existing second fab where land preparation has already begun. The company is targeting a 2029 start of operations, though plans may be adjusted depending on market demand. Government subsidies will also be channeled into the new facility.

The new fab will produce Kioxia's advanced 3D flash memory, BiCS FLASH. The 10th-generation BiCS FLASH, samples of which Kioxia shipped last month, was developed to meet AI data center storage demand. Targeting the enterprise SSD market, the product uses advanced stacking technology to achieve high capacity and low power consumption.

"This joint investment clearly demonstrates Kioxia's strong commitment to further strengthening our long-standing partnership with SanDisk and contributing to the development of an AI-centric society," Kioxia CEO Hiroo Ota said. "We will continue to meet the growing demand for high-capacity, high-performance and power-efficient flash memory that is essential for AI growth."

SanDisk CEO David Goeckeler said the deal underscored a decades-long collaboration. "For decades, SanDisk and Kioxia have jointly developed world-class NAND memory technology," he said. "This investment plan, which aligns with our business strategy and financial guidelines, will meet customers' growing demand for technology."

The NAND market has been gaining renewed importance as AI inference expands, with the commercialization of agentic AI driving a sharp increase in data that must be processed and stored. NAND, which retains data even when power is cut, has come into the spotlight as a result — a dramatic turnaround from just three years ago in 2023, when the industry was mired in heavy losses due to oversupply.

Leading global NAND makers have been announcing investment plans in quick succession. SK hynix, the world's second-largest NAND producer by market share, said earlier this month it would spend 19 trillion won ($13.8 billion) to build a new NAND production complex, M17, in Cheongju, North Chungcheong Province.

M17, which will span 679,800 square meters, is set to break ground in February next year, with the first clean room scheduled to open in December 2028. Investment will be phased in through April 2031. SK hynix currently operates three NAND fabs in Cheongju — M11, M12 and M15.

China's YMTC (Yangtze Memory Technologies), which overtook Kioxia to claim third place in global NAND market share in the first quarter of this year, also plans to channel funds raised through an initial public offering into expanding its NAND factory capacity.

On Friday, YMTC's parent company CCSH (Changjiang Chunqiu Holdings) filed an IPO application on the STAR Market of the Shanghai Stock Exchange. The offering aims to raise 33 billion yuan to expand production lines and fund research and development.