Kioxia has confirmed its IPO plans are on hold as it opened Fab7 at Yokkaichi in Japan with NAND foundry partner Western Digital.
The plans were filed in August 2020 and sought to raise $3.2 billion but were delayed in September that year when the US government banned certain technology exports to China. This affected future Kioxia revenues. Now the extension of these bans has caused a likely downturn in Kioxia exports to China. This, together with a NAND oversupply situation, threatens to depress Kioxia’s revenues.
The IPO would have provided cash for beleaguered Toshiba, which owns 40 percent of Kioxia. Toshiba is talking to bidders about a potential buyout of its poorly performing and loss-making company. The flotation would also provide investment cash for Kioxia.
Bloomberg quoted president and CEO Nobuo Hayasaka as saying: “Now is not the time. We remain on the alert for the best possible timing for an IPO, but as always will also evaluate other financial options.”
New Kioxia fab
On a brighter note, Fab7 will produce 162-layer 3D NAND chips, the sixth generation of Kioxia and WD’s BiCS technology, followed by later generations, such as BiCS 7’s 212-layer flash. The 162-layer product will ship in early 2023. Fab7’s total cost will be ¥1 trillion ($6.8 billion).
Hayasaka said: “Fab7 is the latest and most technologically advanced semiconductor manufacturing facility in Japan and will be indispensable for Kioxia’s future. Long-term global demand for memory products is expected to increase as the world consumes more data across a variety of connected devices.”
In other words, although we’re currently seeing a relatively short-term dip in NAND demand, the medium and long-term picture is great. Kioxia and other NAND manufacturers, including Micron and SK hynix, are cutting capex and lowering production output as they ride out the supply glut and wait for customers to use up their flash chip inventories, and for smartphone and PC demand to recover.
Dr Siva Sivaram, President of Technology & Strategy at Western Digital, said: “With its innovative design and production efficiencies, the new Fab7 facility underscores Western Digital’s commitment to deliver sustainable memory and storage technologies to our customers globally. We value our tremendous relationship with Kioxia.”
This is a nod to the end of disruption to the relationship during prior WD CEO Steve Milligan’s tenure.
Fab7 uses AI techniques to increase production efficiency and has a larger cleanroom area relative to its overall space than prior Kioxia fabs, meaning a larger manufacturing area. It has an earthquake-resistant design and Kioxia says it will use energy-efficient equipment to increase its sustainability rating.