By AFP | 2026-07-16

KITAKAMI, Japan -- Robotic transporters carrying silicon wafers whiz by on overhead rails at Kioxia's newest factory in northern Japan, where the country's leading memory chip maker is expanding production to meet surging artificial intelligence (AI) demand.

The global race to build AI data centers has turbocharged business for memory chip makers, propelling Kioxia into one of Japan's most valuable companies and highlighting the growing strategic importance of semiconductor supply chains in Asia.

While the company is little known outside the technology industry, its share price has surged about sevenfold this year. In June, it briefly overtook Toyota to become Japan's largest company by market capitalization.

Different types of memory chips that store digital information are increasingly essential alongside AI processors, while emerging AI agents capable of performing tasks for users require ever-larger amounts of data storage.

Chinese challenge grows

Kioxia's rise underscores intensifying competition in memory chips, one of the semiconductor sectors where Chinese manufacturers have made some of their biggest advances.

"Kioxia's stock price surge represents a normalization of valuation for what was once an 'ignored sector,'" Counterpoint Research analyst MS Hwang told AFP.

But maintaining its technological lead against China's Yangtze Memory Technologies Co., a rapidly expanding producer of NAND flash chips, will be one of the company's biggest challenges, Hwang said.

AI use "has been expanding rapidly" and "we have high expectations that the market for the flash memory we produce will continue to expand," Kioxia CEO Hiroo Ota said in July at the new fabrication plant, which opened in September.

The company specializes in NAND flash memory, an increasingly sought-after component as AI applications require ever-greater storage capacity.

Other Asian chip makers are benefiting from the AI investment boom. South Korea's SK hynix last week listed on Wall Street after one of the world's biggest stock sales.

Still, broader concerns over overstretched valuations have fueled fears of an AI investment bubble, along with questions over when the enormous spending on AI infrastructure will generate sustainable returns.

Japan rebuilds chip industry

Japan once accounted for about half of the global semiconductor market. Today, that share has fallen to less than 10%, according to the government.

Tokyo is seeking to reverse that decline by targeting an eightfold increase in domestic semiconductor revenue by 2040 compared with 2020 levels.

The government is backing a next-generation chip manufacturing hub in Hokkaido, while Taiwan Semiconductor Manufacturing Co. (TSMC) has opened a fabrication plant in Japan's southern island of Kyushu as part of the country's broader semiconductor revival.

The new Kioxia factory is the company's second facility on the green outskirts of Kitakami, where AFP viewed rows of white chip-etching machines inside tightly controlled clean rooms designed to prevent dust contamination.

Near Kitakami station, recruiter Noriyuki Takahashi, 47, said demand for workers had risen sharply thanks to Kioxia's expansion.

"It's a good thing to have so many jobs here experiencing improving business sentiment," he told AFP.

Bar owner Hana, 57, was more cautious.

"Semiconductors are an industry with a lot of ups and downs," she said. "The locals are anxious about how long it will last."

Kioxia began as Toshiba Memory before financially troubled Toshiba sold the business in 2018.

Now the company plans to pursue a U.S. stock market listing similar to SK hynix and forecasts operating profit of 1.3 trillion JPY ($8 billion) for the April-June quarter, up sharply from 45 billion JPY (about $277 million) a year earlier.

Some workers in Kitakami are receiving bonuses that are "impossibly high" for the region, Hana said.

But she cautioned that fierce international competition remained.

"Taiwan is working hard; other places are working hard," she said.