Key Takeaways
A 24-fold surge in the share price of memory-chip maker Kioxia Holdings over the past year is signaling a potential changing of the guard in Japan’s stock market, as a global semiconductor boom lifts the sector past traditional industrial titans.
"The projected net profit of JPY2.4 trillion for the world-leading NAND memory chip manufacturer is too large to be fully utilized, even in a highly capital-intensive industry," Kim Sung Kyu, an analyst at Daiwa Securities Capital Markets, said in an April note where he raised Kioxia's price target to JPY50,000.
The rally in Japan follows a sharp climb in US memory stocks on May 8, where Micron Technology Inc. surged 15.5% and SanDisk Corp. gained 16.6%. The move sparked a region-wide rally on May 11, with South Korea’s Samsung Electronics and SK Hynix climbing 6.3% and 11.5% to record highs, while Hong Kong-listed Montage Technology and GigaDevice Semiconductor rose 11.2% and 7.8%, respectively. Kioxia itself closed up 3.3% at JPY45,940.
The stunning ascent, which has catapulted Kioxia from Japan’s 43rd most valuable company to its 5th in just a year, puts its projected operating profit of JPY4 trillion for the fiscal year ending March 2027 ahead of the JPY3 trillion forecast for Toyota Motor Corp., long the nation’s corporate crown jewel. The chipmaker is scheduled to report its full-year results on May 15.
Driving the gains is what analysts are calling a "supercycle" in the memory chip sector, fueled by voracious demand from the artificial intelligence industry. AI processors require vast amounts of high-bandwidth memory like DRAM and NAND to handle complex workloads, a demand that has sent the Roundhill Memory ETF (DRAM) up more than 30 percent in a single week.
This structural demand is prompting major producers to accelerate expansion. Samsung is advancing the construction of a new mega-fab, while SK Hynix is reportedly fielding offers from large tech firms to directly fund new production lines. The boom reflects "an intent to cement market dominance throughout the multi-year AI semiconductor boom," according to a note from Roth analysts.
The supply crunch is leading to significant pricing power and margin expansion for chipmakers. Gross margins for Micron are projected to hit 76.9% this year and 81% in 2025, with SanDisk expected to see similar gains, according to data from FactSet. Krish Sankar, an analyst with TD Cowen, estimated that pricing for DRAM and NAND could surge by approximately 180% by mid-2026 from last year's third-quarter levels.
This upstream boom is creating a downstream squeeze. Both Apple CEO Tim Cook and Microsoft CFO Amy Hood have recently cited rising memory costs as a significant factor impacting their business, a trend that is expected to continue.
The shift is redrawing Japan's market landscape. A decade ago, automakers and telecom operators dominated the top ranks of the Tokyo Stock Exchange. As of last week, four of the top ten were semiconductor-related firms, including Kioxia, SoftBank Group, Tokyo Electron, and Advantest.
This article is for informational purposes only and does not constitute investment advice.
