Kioxia dismisses SK Hynix tie-up, vows to ease chip price rises

Kioxia’s CEO, Hiroo Ota, rejected the chances of deeper collaboration with SK Hynix amid worries of antitrust hurdles, in a bid to keep memory prices from soaring and impacting artificial intelligence demand. The memory chip sector is investing significantly to boost production capacity to cope with the surge in orders from AI service providers, driving up prices by double or even triple digits.

While some investors, including SK Hynix’s chairman, have suggested manufacturing partnerships could mitigate the hefty capital investments required, Kioxia’s Ota highlighted the difficulty in reconciling such ties with the joint manufacturing ventures they already have with SanDisk. During an interview with Asahi newspaper, SK chairman Chey Tae-won mentioned a potential manufacturing tie-up between Kioxia and SK Hynix, but Kioxia’s Ota clarified that no discussions are underway, noting that such a scenario would be impractical given the existence of their joint operations with SanDisk.

Kioxia, specializing in Nand flash memory chips, has become a focal point in the global AI investment surge, with major companies rushing to secure advanced chips from Kioxia and other competitors like Samsung Electronics, SK Hynix, and Micron Technology. The shortage of memory chips has prompted Kioxia and SanDisk to plan over 5 trillion yen (US$33 billion) in investments for expanding production at their shared facilities.

SK Hynix is also planning a 54 trillion won (US$40 billion) expansion of its domestic chipmaking facilities and building an advanced memory packaging plant in Indiana. The possibility of closer ties between SK Hynix and Kioxia has increased due to their collaboration on non-volatile magnetic memory and Kioxia’s use of SK Hynix's DRAM in some solid-state drives.

The shortage of memory chips, expected to persist for years, has led to a continuous rise in chip prices. Kioxia’s Nand flash memory prices rose 70% in the June quarter, more than doubling compared to the previous quarter. Analysts anticipate a more than ninefold increase in the company’s operating profit for the year ending March.

However, Ota instructed his sales teams not to demand significant price hikes from data center operators, fearing it might harm investment in the AI sector. Despite the likelihood of another 70% quarter-on-quarter price increase being slim, Kioxia's CEO emphasized that the current high prices should be maintained for now, stating that raising prices excessively could harm their market and growth.