Kioxia’s Plunge in Japan Sends Warning Signals to the Global Semiconductor Market

On November 14, 2025, a shocking scene unfolded at the Tokyo Stock Exchange. Kioxia Holdings, a leading Japanese flash memory manufacturer, plummeted by 23.03%, starting the day at its lower limit. This was not just a case of poor performance by an individual company; it sent ripples across the global semiconductor market, causing declines in Korean semiconductor companies like Samsung Electronics and SK Hynix as well. Interestingly, this incident occurred amidst the ongoing AI semiconductor boom, revealing the complex realities of the semiconductor industry.

A closer look at Kioxia’s Q2 2025 financial results shows a 6.8% year-over-year decrease in revenue, totaling 448.3 billion yen, while net profit plummeted by a staggering 62% to 41.7 billion yen. Notably, the performance disparity among business segments was stark. The smart device segment generated 157.3 billion yen in revenue, but the SSD and storage segment saw a 10.8% decline to 244.6 billion yen compared to the previous year. This is not merely a case of poor performance but an indicator of inherent issues within Kioxia’s business structure.

Understanding Japan’s stock market lower limit system clarifies the severity of this situation. Unlike Korea, Japan sets the lower limit by absolute amount rather than percentage (-30%). For stocks priced above 10,000 yen per share, the lower limit is set at 3,000 yen, and Kioxia fell precisely to this limit. This is a strong signal of the concentrated selling pressure from investors.

The shock from Kioxia immediately spread to the global semiconductor market. On the same day, the Philadelphia Semiconductor Index in the U.S. plummeted by 3.72%, with major semiconductor companies all experiencing declines. Micron Technology (headquartered in Idaho, USA) fell by 3.25%, AMD (Advanced Micro Devices, headquartered in California, USA) by 4.23%, ARM Holdings (headquartered in Cambridge, UK) by 5.67%, and Lam Research (headquartered in California, USA) by 5.02%. This exemplifies the interconnectedness of the semiconductor industry.

The domestic semiconductor market was no exception. Samsung Electronics fell by 3.99% to 98,700 won, dropping below the 100,000 won mark again, while SK Hynix plummeted by 6.21% to 574,000 won, failing to reach the 600,000 won level. Particularly for SK Hynix, which holds a major share in Kioxia through the Pangea Fund, the impact was inevitable. This is a prime example of the complex shareholding structures and interdependencies in the global semiconductor industry.

Structural Weaknesses in Kioxia’s Business Structure

Ryu Young-ho, a researcher at NH Investment & Securities, attributed Kioxia’s poor performance to a “negative product mix.” The core issue is Kioxia’s over-reliance on the relatively less profitable mobile flash memory segment, rather than the rapidly growing eSSD (enterprise SSD) market. The problem is exacerbated by the structural weakness of heavy reliance on large-volume contracts with a single major customer in the mobile segment.

Market analysts speculate that Kioxia’s major customer is Apple Inc. (headquartered in California, USA). The excessive dependence on mobile flash memory for Apple’s iPhones is seen as a key reason for the poor performance. This is a typical example of “customer concentration risk” commonly seen in the semiconductor industry. The higher the dependence on a single customer, the more vulnerable a company becomes to changes in that customer’s demand or strategy.

Another important factor relates to Kioxia’s IPO strategy. Compared to the aggressive revenue growth in 2024 ahead of its December IPO, the relatively poor performance in 2025 creates an optical illusion. While this is a common phenomenon where companies “dress up” their performance before an IPO, it can lead to greater disappointment among investors than expected.

Comparing Kioxia’s business portfolio with its competitors highlights its weaknesses more clearly. Samsung Electronics has built a balanced portfolio across mobile, server, and PC segments, with strong competitiveness in high-value products like eSSD and memory for data centers. SK Hynix is also benefiting significantly from the AI semiconductor boom, thanks to its dominant position in the HBM (High Bandwidth Memory) market.

The Current State of the Global Memory Semiconductor Market

To understand the Kioxia incident in a broader context, it’s necessary to examine the structural changes in the global memory semiconductor market. As of 2025, the memory semiconductor market is experiencing unprecedented prosperity due to the surge in demand for AI and data centers. However, the benefits of this boom are not evenly distributed among all companies. Instead, polarization is intensifying, with winners and losers clearly distinguished based on technology and product portfolios.

According to market research firm Gartner, the global memory semiconductor market in 2025 is expected to grow by about 15% year-over-year to reach $120 billion. Among these, the growth rates for the HBM and eSSD markets are projected to be 80% and 45%, respectively. In contrast, the traditional mobile NAND flash market is expected to grow by only around 5%, creating an unfavorable environment for companies like Kioxia with mobile-centric portfolios.

As of Q3 2025, Samsung Electronics maintains its top position in the global NAND flash market with about a 33% share. SK Hynix holds a dominant 95% share in the HBM market, positioning itself as the biggest beneficiary of the AI semiconductor boom. Meanwhile, Kioxia remains in third place in the overall NAND flash market with about an 18% share, with relatively limited competitiveness in high-value product lines.

The joint venture relationship between Western Digital (headquartered in California, USA) and Kioxia is also an interesting point of observation. The two companies jointly operate four fabs in Japan and closely collaborate in production capacity and technology development. However, recent news that Western Digital is considering redefining its relationship with Kioxia has increased uncertainty about Kioxia’s future strategy.

The rise of emerging competitors like China’s YMTC (Yangtze Memory Technologies, headquartered in Wuhan, China) also adds pressure on Kioxia. Although YMTC’s growth is constrained by U.S. export restrictions, its expanding market share in China’s domestic market is changing the global market landscape. The intensifying price competition in the mid-to-low-end product range further pressures companies like Kioxia that have not secured differentiated technology.

The Kioxia incident holds significant implications for Korean semiconductor companies as well. For Samsung Electronics, Kioxia’s poor performance could serve as an opportunity to expand market share. If major customers like Apple pursue supplier diversification, Samsung is likely to benefit. In fact, Samsung has recently expanded its memory supply contract with Apple, and Kioxia’s weakened market position could accelerate this trend.

SK Hynix faces a more complex situation. While it may incur direct investment losses due to its stake in Kioxia through the Pangea Fund, it also has the opportunity to leverage Kioxia’s technology and production capabilities. If SK Hynix can realign Kioxia’s 3D NAND technology and production lines with its strategic goals, it could lead to enhanced competitiveness in the long term.

The Kioxia incident symbolically highlights the structural changes in the semiconductor industry. It starkly reveals the reality that sustainable growth is no longer guaranteed with a traditional mobile-centric business model in a market being reshaped around AI and data centers. Moving forward, semiconductor companies will need to adapt to a new competitive landscape based on high-value products and differentiated technology beyond mere capacity competition. Kioxia’s future response strategy and the market’s reaction will be crucial barometers for the future of the global memory semiconductor industry.

This article was written after reading an article from Hankyung Global Market and adding personal opinions and analysis.

Disclaimer: This blog is not a news outlet, and the content reflects the author’s personal views. The responsibility for investment decisions lies with the investor, and no liability is accepted for any investment losses based on this article.