Why Kioxia Is Investing ¥5 Trillion to Expand Production: NAND Capacity as a Bargaining Chip in the AI Era

Kioxia Holdings and SanDisk simultaneously announced a capacity expansion investment plan totaling approximately ¥5 trillion. Kioxia will provide 60% of the funding and SanDisk 40%, with approximately ¥1.8 trillion confirmed for allocation to the new K3 fab in Kitakami, Iwate Prefecture. Site preparation work for K3 has already begun, and operations are targeted to start by the end of fiscal 2029. The Yokkaichi fab in Mie Prefecture will also be expanded at the same time, but the destination of the remaining approximately ¥3.2 trillion has not yet been disclosed.

The investment will proceed in two stages. A total of ¥1.4 trillion will be invested over the three years from fiscal 2027 through fiscal 2029, with annual spending maintained at approximately ¥45 billion to ¥50 billion. At the same time, some spending will be brought forward to fiscal 2027 and fiscal 2028, while the plan calls for investment to rise sharply to approximately ¥1.25 trillion from fiscal 2030 through fiscal 2033.

Based on this plan, UBS has indicated that, if implementation proceeds in stages, it could generate new capacity of 200,000 to 220,000 wafers per month for the 332-layer BiCS10 generation and 180,000 to 200,000 wafers per month for the 4xx-layer generation. Starting from monthly production of approximately 350,000 wafers at the end of fiscal 2028, the view is that capacity could recover to approximately 550,000 wafers once all investment is completed.

The investment is predicated on policy support from the Japanese government, which has positioned the semiconductor industry as a key pillar of its national strategy. Kioxia and SanDisk have maintained their partnership for many years, extending their joint venture agreement for the Yokkaichi fab and strengthening their technology collaboration.