Kioxia’s Q3 Revenue Drops by 9.7% Amid Chip Demand Slump

Kioxia, the Japanese semiconductor giant, faced a 9.7 percent quarter-on-quarter drop in revenue, reporting 241.4 billion yen for the September quarter compared to 251.1 billion yen in the previous quarter. This decline was attributed to a slump in demand for memory chips utilized in smartphones and personal computers (PCs).
Kioxia semiconductorDespite the quarter-on-quarter fall, Kioxia highlighted that the impact was mitigated by higher average selling prices, which were supported by the weaker yen. The company’s operating loss in the second quarter stood at 100.8 billion yen ($664.5 million), marking an improvement from the 130.8 billion yen loss in the prior quarter.

The semiconductor market, especially memory chip manufacturers, has been grappling with reduced demand ever since the onset of the COVID-19 pandemic, resulting in an oversupply situation and mounting pressure for industry consolidation.

Merger talks between Kioxia and Western Digital hit a snag following SK Hynix’s opposition to the deal. A potential merger between Kioxia and Western Digital would have established a dominant force, commanding one-third of the global NAND flash memory market, challenging Samsung Electronics’ position and threatening SK Hynix’s market share.

While Western Digital has announced plans to spin off its memory business, it remains open to alternative strategies that would offer greater value than the proposed separation.

Despite the current challenges, the semiconductor industry anticipates a boost from investments in artificial intelligence. Kioxia remains cautiously optimistic, suggesting that selling prices have likely stabilized. Moreover, an anticipated increase in shipments of smartphones and PCs in the coming year is expected to positively impact demand for NAND flash memory, indicating a potential rebound.

In a separate development, Toshiba, a stakeholder in Kioxia following the sale of its chip unit to a Bain-led consortium in 2018, reported a net loss of 26.7 billion yen in the second quarter. The conglomerate is set to go private following a successful $13.4 billion tender offer from Japan Industrial Partners, a private equity firm.

The future trajectory of the chip industry, particularly regarding the recovery of NAND flash memory demand, remains contingent on various factors, including market stabilization and the resurgence of global device shipments in the upcoming year.