Kioxia-Sandisk venture to spend 1.8 trillion yen on new chip factory

Leading memory chipmaker Kioxia Holdings Corp. will construct a new building at its plant site in Kitakami, Iwate Prefecture, to meet increased demand from the surge in data centers linked with the spread of generative artificial intelligence.

The company announced Aug. 27 that it will invest 1.8 trillion yen ($11.3 billion) so the new facility can begin operations in fiscal 2029.

The investment will be made alongside Sandisk Corp. of the United States, which Kioxia has a joint venture with. The project is expected to utilize a subsidy program under the ministry of trade and industry.

Kioxia President Hiroo Ota and Sandisk CEO David Goeckeler met with Prime Minister Sanae Takaichi the same day of the announcement.

“In order to maintain and strengthen our international competitiveness, we will need the continued and strategic support of the government,” Ota said.

The government has decided to provide the two companies with about 243 billion yen in subsidies for plants in Japan.

The company announcement indicated a total of about 5 trillion yen will be invested domestically by 2032 while receiving additional support from the government. 

The new facility will be the company’s third domestic plant after the Kitakami location and its plant in Yokkaichi, Mie Prefecture.

Kioxia is the world’s third-largest producer of NAND flash memory used for long-term computer storage. Industry leader Samsung Electronics Co. and SK Hynix Inc. hold the top two positions.

These two South Korean companies have announced plans to each invest about 100 trillion yen in the medium- to long term to boost their manufacturing capabilities, highlighting the increased international investment competition.