Kioxia's Cautious NAND Capex Stokes Super-Cycle Debate
Japanese NAND flash maker Kioxia reclaimed the top spot by market capitalization on the Tokyo exchange. According to Nikkei Asia, Kioxia plans to invest roughly 470 billion yen annually over the next three years, about 10% below its record 2022 capex — a notably restrained figure given surging NAND prices and persistent shortages.
The restraint traces back to a painful 2022 lesson, when Kioxia poured roughly 1 trillion yen into expanding its Yokkaichi plant capacity only to see prices collapse amid an industry-wide chicken game. Management has since shifted toward balancing capacity growth with shareholder returns, telling investors recently it would invest only within limits given expected strong cash flow.
This is read as evidence that price gains (P), rather than volume growth (Q), are now driving profits in the NAND market — a calculus likely shared across global chipmakers, with implications for Samsung Electronics and SK Hynix investment strategy. Morgan Stanley outlined a bullish scenario where wafer shortages could push prices to double current levels by 2028, potentially lifting three-year EPS growth at U.S.-listed SanDisk and Western Digital by up to tenfold. In NAND market share, Samsung ranks first, SK Hynix second, and Kioxia third.
The news was also cited as pushback against fears the chip cycle is nearing its peak. Samsung and SK Hynix still plan capacity expansion, raising concern that simultaneous capacity additions across leading players could reignite past oversupply-driven price wars. However, the spread of long-term supply agreements (LTAs) is seen as mitigating that risk considerably. Micron cited a five-year contract in its latest earnings call, SanDisk has referenced LTAs since early this year, and SK Hynix is reported to have secured much of next year's volume under long-term deals — providing a cushion against price and volume swings.
Some caution persists, however, recalling how similar long-term battery supply contracts signed amid earlier shortage fears were later canceled as conditions shifted. Counterarguments note memory chip contracts differ because they cover current, actively-used demand rather than speculative future battery demand. Ultimately, Kioxia's own restraint — refusing to pull the trigger on a capacity race — is being interpreted as a signal that the chip industry has entered a genuinely new phase rather than a typical cyclical upswing.