Japan expands subsidy to downturn-hit Kioxia and Western Digital

Japan expands subsidy to downturn-hit Kioxia and Western Digital
Japan expands subsidy to downturn-hit Kioxia and Western Digital

Japan’s industry ministry said that it would provide subsidies of up to 242.9 billion yen to Kioxia and Western Digital to enhance memory chip manufacturing.

Japan’s industry ministry announced on Tuesday that it would extend subsidies worth up to 242.9 billion yen ($1.64 billion) to Bain Capital-backed Kioxia and Western Digital to boost memory chip manufacture in Mie and Iwate prefectures.

The cash provides support for the two companies, which have been hit by a drop in the market for NAND flash chips and whose merger talks stopped late last year due to opposition from Kioxia investor SK Hynix.

Japan’s powerful industry ministry hopes to restore the country’s lost position as a major chip center by providing subsidies to domestic and foreign chipmakers and ensuring chip supply despite trade concerns between China and the United States.

“The memory market is expected to grow significantly in the future, including for generative AI,” Japanese Industry Minister Ken Saito said.

“The joint investment by Kioxia and Western Digital brings together Japan and the U.S. to fulfill our responsibility to supply the memory the world needs,” stated Mr. Suzuki.

SK Hynix has emerged as a significant benefit of Nvidia’s investment in generative AI, which uses the South Korean company’s high-bandwidth memory (HBM) semiconductors.

Kioxia was split off from Toshiba, which pioneered NAND in the 1980s, when Japan was the world’s leading chipmaker.

The subsidies comprise 92.9 billion yen, previously approved in 2022, plus an additional 150 billion yen. Production will incorporate cutting-edge 3D flash memory, with an investment of around 728.8 billion yen.

“The more data is used, the more memory consumption will increase, so in that sense, global demand will surely grow in accordance with NAND’s characteristics,” according to an official from the industry ministry.

Western Digital, whose shares are up 12% year to date, has announced plans to split off its flash memory division.

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