Kioxia: Japanese Chipmaker Ready for IPO

1 minutes reading time
Published 30 Aug 2024
Reviewed by: Emil Persson

Kioxia, the innovator behind the NAND flash memory, has established itself as a key player in the data storage industry, with its products used in everything from consumer electronics to large-scale data centers. After being involved in a carve-out from Toshiba in 2018 the Japanese chipmaker is now set for a market comeback, this time as an independent company. With an IPO potentially as early as October this year, Kioxia could see a valuation of $10 billion, making it Tokyo's biggest offering this year. Let's dive into the details.

Key Insights

  • iPhone inclusion: Kioxia's NAND flash memory is a critical component in Apple's highly demanding iPhone.

  • Strong market presence: Holding a 20% market share, Kioxia is the third-largest flash memory producer globally.

  • Ready for IPO: After a few attempts, including a failed merger, the Japanese company is now ready to list on the Tokyo Stock Exchange, which could happen as early as October.

Kioxia and the NAND Flash Memory

Before becoming Kioxia, the company was simply Toshiba's data storage business. After being taken private in 2018, the now independent company adopted the name "Kioxia", a mix of the Japanese word "kioku" meaning memory, and the Greek word "axia" meaning value, reflecting the company's vision to “uplift the world with memory’”.

The history of Kioxia goes back to the invention of the NAND flash memory when an engineer at Toshiba, Dr. Fujio Masuoka, invented the breakthrough product in 1987. This invention enabled data to be stored in a non-volatile manner, meaning it could be retained even when power was removed. Toshiba quickly recognized its potential and invested heavily in the development of the product. By the late 1980s and early 1990s, NAND flash had matured enough to be used in various storage devices, including USB drives and memory cards.

Kioxias Product Portfolio

Throughout the 1990s and 2000s, Toshiba expanded its flash memory business, becoming a dominant force in the market as the interest in the products multiplied.

As of today, Kioxia's NAND flash memory is still its flagship product, with several types tailored to different applications. In this category, we find the BiCS FLASH, which is used in a variety of products, from data centers to smartphones. This includes Apple's iPhone where Kioxias flash is one of many components that meets the exceptionally high requirements of the popular product.

Another key product segment is the company's solid-state drives (SSDs), including both consumer electronics and enterprise-level data storage. On the consumer side, the Client SSDs are widely used in laptops, desktops, and gaming systems, while its Enterprise and Data Center SSDs are optimized to handle more intensive workloads in large-scale business operations. Additionally, the company offers storage solutions like UFS (Universal Flash Storage) and e-MMC, which are essential components in smartphones, tablets, and automotive systems.

In the highly competitive semiconductor industry, Kioxia commands a 20% market share in flash memory products, positioning it as the third-largest producer globally, behind only Samsung and its shareholder SK Group.

Financial Performance

Since going private, Kioxia has experienced fluctuating financial performance, reflecting the industry's challenges, such as the COVID-19 pandemic, and opportunities, including the semiconductor and AI boom. So far his year, the Japanese chipmaker has reported a record net income of ¥70 billion ($479 million) for the April-June quarter, which, if annualized, would amount to approximately ¥300 billion ($2.08 billion).

Carve-out and Comeback Attempts

As previously mentioned, before becoming Kioxia, the Japanese chipmaker was a highly regarded division of Toshiba. However, in a surprising turn of events, it was sold off to a consortium led by Bain Capital in what was considered a "fire sale" due to Toshiba's accounting scandal and financial crises in 2018. The $18 billion buyout deal left Toshiba with a 41% stake in Kioxia and the Bain-led consortium with 56%. This marked the largest private equity-led buyout in Japan’s history. During this time, competitor SK Group also secured a substantial stake by investing approximately $2.9 billion in the carve-out.

Since then, there have been multiple attempts to put Kioxia back into the public markets. Initially, the company was set for a 2020 listing but was disrupted by the COVID-19 pandemic and escalating trade tensions between the U.S. and China, both of which created significant uncertainty in the global semiconductor market. Later efforts to merge with U.S. data storage giant and partner Western Digital nearly came to fruition, but the deal ultimately fell through in October 2023, largely due to opposition from shareholder SK Group.

2024 IPO Details

Bain Capital is now once again moving forward with its IPO preparations having officially applied for a listing of Kioxia on the Tokyo Stock Exchange. The Japanese chipmaker plans to raise at least $500 million and is aiming to list as early as October according to a person with insight, capitalizing on the current market enthusiasm for semiconductor and AI-related stocks.

Another person close to the situation indicated that Kioxia is looking at a valuation of ¥1.5 trillion (~$10 billion). The company's annualized net income equaling ¥300 billion would imply a price-to-earnings ratio of around five times, lower than industry peers Samsung and Western Digital which trade at roughly double that multiple. The discount reportedly reflects Kioxia's market position, debt levels, historical performance, and the pricing necessary to attract both global and domestic investors to its IPO. Nevertheless, this valuation would represent Japan's largest public offering of the year.

In Conclusion

Since the invention of NAND flash memory, Kioxia has remained at the forefront of data storage technology, with its inclusion in Apple's iPhone serving as an ultimate testament to the quality of its products. With its long-awaited IPO just around the corner, the company is ready to continue to drive innovation and solidify its position as a key player in the semiconductor industry.


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