Kioxia stock has declined over 20% this month, with Wall Street analyst Mark Li from Sanford C. Bernstein projecting the stock could fall an additional 40% from current levels. The decline follows profit-taking after a sharp rally and reflects growing concerns over competition from Chinese NAND flash manufacturer Yangtze Memory Technologies Corporation (YMTC). Kioxia's stock movement mirrors broader weakness in memory semiconductor stocks, including Samsung Electronics and SK Hynix in the Korean market, against a backdrop where the stock had been considered a key beneficiary of the AI semiconductor rally.
Kioxia Stock Falls Over 20% This Month on Tokyo Exchange
According to the Tokyo Stock Exchange (JPX), Kioxia stock has dropped more than 20% this month. The decline came as memory semiconductor stocks including Samsung Electronics and SK Hynix showed weakness in the Korean market, combined with profit-taking following the stock's earlier surge.
The Nikkei 225 index also fell after three consecutive trading days of gains. While banking stocks such as Mitsubishi UFJ Financial Group showed strength, AI-related stocks with high index contribution including Kioxia and Advantest declined, pulling the index down.
Tomohiro Kubota, chief market analyst at Matsui Securities, stated that "Japanese semiconductor stocks are being affected by the decline in the Korean market, which has a large weighting in memory semiconductor stocks."
Retail Investors Hold Record ¥870 Billion in Kioxia Credit Positions
Despite the stock price correction, individual investor enthusiasm for Kioxia remains strong. According to the Tokyo Stock Exchange, Kioxia's credit trading buy balance has swelled to a record high.
When converting the credit buy balance of Nikkei 225 constituent stocks on a stock price basis, Kioxia had the largest amount at approximately ¥870 billion. This is nearly four times the size of SoftBank Group's balance. The result is interpreted as individual investors seeking high returns engaging in large-scale leveraged trading.
The recent stock price decline has reportedly increased margin call requirements for credit trading investors. There is a possibility of a vicious cycle where selling volume to avoid margin calls could further pull down the stock price.
Bernstein Sets ¥40,000 Price Target, 40% Below Current Level
Nihon Keizai Shimbun reported that pessimistic forecasts are spreading on Wall Street. Mark Li, analyst at U.S. brokerage Sanford C. Bernstein, presented a price target of ¥40,000 for Kioxia. This is approximately 40% lower than the closing price on the 13th.
This contrasts with Japanese brokerages, which generally present price targets above ¥100,000. While Li presented price targets 70%, 80%, and 30% higher than current stock prices for Samsung Electronics, SK Hynix, and Micron respectively, he gave a uniquely conservative assessment only for Kioxia.
Li viewed the current memory price increase and demand shortage as unsustainable over the long term. He regarded profits occurring during the memory supply shortage period continuing until 2028 as temporary excess profits, and calculated corporate value based on performance after 2029 when supply and demand are expected to normalize.
YMTC Market Share Reaches 13% in Q1, Up 5 Percentage Points Year-Over-Year
YMTC was identified as Kioxia's biggest risk factor. YMTC, like Kioxia, produces NAND flash as its main product and has been rapidly expanding market share recently.
According to market research firm Counterpoint Research, YMTC's global NAND market share was 13% in Q1 this year, up 5 percentage points from a year ago. Bernstein projected that YMTC will overtake Kioxia to become the world's third-largest NAND manufacturer by 2028.
The technology gap is also narrowing rapidly. Kioxia promotes 'CBA' technology, which bonds substrates to increase processing speed, as its competitive advantage. Kioxia President Hiroo Ota stated at a recent press conference that "the only companies that have commercialized this technology are Kioxia and YMTC."
Concerns have emerged that if YMTC secures funding through an initial public offering and begins full-scale production increases, oversupply and price declines in the NAND market will be inevitable. The situation where Japanese TV, PC, and LCD panel companies in the past suffered deteriorating profitability and moved toward business restructuring or withdrawal under pressure from Chinese companies' low-price offensives could be replicated in the semiconductor industry.
While Samsung Electronics and SK Hynix will also find it difficult to avoid the impact of YMTC's production increase, they are evaluated to face more limited shock than Kioxia, which has high NAND dependence, because their businesses are diversified into DRAM and high-bandwidth memory.
Given that Kioxia has emerged as a representative stock of Japan's AI rally, if the stock price decline becomes prolonged, it could also shock the overall Japanese stock market. Considering the rapid technology catch-up and price offensive from Chinese companies, the analysis is that the '¥40,000 stock price' forecast is difficult to dismiss as simple pessimism.
FAQ
What caused Kioxia stock to decline over 20% this month?
Kioxia stock fell over 20% this month due to profit-taking following an earlier rally and weakness in memory semiconductor stocks including Samsung Electronics and SK Hynix in the Korean market. The decline also reflects growing concerns over competition from Chinese NAND manufacturer YMTC.
What price target did Sanford C. Bernstein set for Kioxia?
Mark Li, analyst at Sanford C. Bernstein, set a price target of ¥40,000 for Kioxia, which is approximately 40% lower than the closing price on the 13th. This contrasts with Japanese brokerages that generally present price targets above ¥100,000.
What is YMTC's current market share in the global NAND market?
According to Counterpoint Research, YMTC's global NAND market share was 13% in Q1 this year, up 5 percentage points from a year ago. Bernstein projects YMTC will overtake Kioxia to become the world's third-largest NAND manufacturer by 2028.
