Kioxia Stock Drops 16% as Flash Memory Profit Growth Stalls

Kioxia stock fell 15.78% in Tokyo on Monday, November 2, after the Japanese flash memory maker guided for almost no profit growth in the October to December quarter. Kioxia expects operating profit of about 2 trillion yen ($12.7 billion), well below the 2.35 trillion yen analysts expected, according to Bloomberg.

The drop made Kioxia the biggest drag on the Nikkei 225, which closed 0.33% lower at 63,081.86, Reuters reported. Bloomberg said the shares fell as much as 17% during the session to 11,165 yen, their lowest intraday level since April 22. Chipmaking equipment supplier Tokyo Electron moved the other way, rising 5.16% after it forecast a 50% jump in annual net profit.

Why Kioxia stock fell after record results

The sell-off did not come from weak results. In the July to September quarter, Kioxia reported revenue of 2,480.0 billion yen (about $15.4 billion) and operating profit of 1,994.7 billion yen, up from 1,767.1 billion yen and 1,270.0 billion yen a quarter earlier, according to its October 30 earnings release. That works out to an operating margin of roughly 80%.

The problem is the next quarter. Kioxia forecasts revenue of 2,500.0 billion yen and operating profit of 1,995.0 billion yen for October to December, which is up 0.8% and flat compared with the previous three months. The company said data center demand should stay strong, but it expects a stronger yen to hold results back. It now assumes an average rate of 157 yen per dollar, compared with 161 yen in the September quarter.

Price growth is also slowing. Kioxia’s average selling price for NAND flash rose by a mid-20% rate in the September quarter, compared with about 70% in the quarter before, The Japan Times reported citing Bloomberg.

Kioxia says the slowdown is about timing

Chief Financial Officer Yoshihiko Kawamura told analysts that some orders planned for the December quarter were pulled forward into the September quarter at customers’ request, while others will slip into the March quarter because enterprise storage products need longer production lead times, Bloomberg reported. He said Kioxia expects to return to rapid growth in the January to March quarter.

The company also said its planned output for 2027 is already sold out and more than half of its 2028 production has been allocated. Some large customers have started talks on contracts covering 2029 and beyond, according to Bloomberg.

What it means for the memory market

Kioxia has been one of the biggest winners of the AI build-out, as data centers buy huge amounts of SSD storage alongside the high-bandwidth memory that has pushed up RAM prices for PC and phone buyers. Investors now worry that the steepest part of the price cycle is behind it. Unlike Samsung, SK Hynix and Micron, Kioxia sells only NAND flash and no DRAM, which Bloomberg noted can leave it with less bargaining power than its Korean rivals.

SK Hynix posted record third-quarter revenue last week as the memory shortage continued.

China’s DRAM maker is also cashing in on the shortage, with CXMT reporting an $8.2 billion profit for the third quarter.

For consumers, a flat outlook from a major NAND supplier does not mean cheaper SSDs yet. It signals that flash prices are leveling off at today’s high levels rather than falling, and South Korea’s Newspim reported that prices for about half of Kioxia’s December quarter shipments are still being negotiated.