Kioxia operating profit hits ¥1.99 trillion on AI SSD demand

Kioxia Holdings reported a second-quarter operating profit of ¥1.99 trillion ($13.1 billion) on Oct. 30, 2026, driven by surging orders for enterprise solid-state drives from artificial intelligence data centers.

The operating profit for the July-September period jumped from ¥85.9 billion a year earlier, representing a 23-fold increase. The result exceeded the chipmaker's own guidance of ¥1.89 trillion.

Quarterly revenue reached ¥2.48 trillion, up from ¥448.3 billion in the prior-year quarter. Net profit attributable to owners of the parent climbed to ¥1.31 trillion.

Tokyo-based Kioxia is the world's third-largest producer of NAND flash memory, the non-volatile storage silicon used in servers, PCs and smartphones. The company listed on the Tokyo Stock Exchange under ticker 285A.

Demand for data storage expanded rapidly as hyperscale cloud operators built facilities for generative AI models. System builders exhausted graphics processing units and high-bandwidth memory, shifting procurement attention to high-capacity enterprise solid-state drives (eSSDs).

Those server-grade solid-state drives store the multi-terabyte datasets required to train foundational models and log real-time checkpoint data. The shift redirected server capital budgets directly toward flash arrays.

For the six months ended Sept. 30, Kioxia recorded revenue of ¥4.2472 trillion and an operating profit of ¥3.2647 trillion. Six-month net profit totaled ¥2.1978 trillion, compared with ¥58.9 billion in the corresponding period of 2025.

The surge in high-margin enterprise drives allowed Kioxia to restore its balance sheet after two years of memory-market contraction. The company held ¥1.4 trillion in cash and equivalents at the end of September.

Kioxia declared an interim dividend of ¥90 per share, the first dividend distribution in the company's operating history. The board approved the payout following the completion of an ¥800 billion share repurchase program in August.

Management stated during the investor conference that production capacity for calendar year 2027 is completely sold out. Hyperscale operators sought multi-year delivery commitments to guarantee factory allocation.

More than 50% of expected NAND flash shipments for calendar year 2028 are now committed under long-term supply agreements, the company said. Long-term agreements protect factory volume from sudden cancellations.

The procurement rush altered factory economics across Kioxia's fabrication sites in Yokkaichi and Kitakami. Fabrication lines reached maximum operational capacity during the summer, ending previous production curbs.

Kioxia produces flash memory jointly with Western Digital's SanDisk division. The joint venture partners approved capital investments exceeding $31 billion in August to build the new Fab 3 cleanroom at Kitakami.

Production of eighth-generation BiCS flash chips accounted for more than 50% of total wafer output by September. The 218-layer architecture lowers bit manufacturing costs while increasing read speeds for inference workloads.

Blended average selling prices for NAND flash gained in the mid-20% range during the second quarter compared with the previous three months, the company said. That followed a 70% price surge during the April-June period.

Price momentum began moderating as seasonal smartphone manufacturing slowed and server procurement leveled off. The stabilization prompted management to adopt a cautious posture for the final calendar quarter.

For the October-December quarter, Kioxia forecast operating profit of roughly ¥2.0 trillion on revenue of ¥2.5 trillion. That guidance came in below the market consensus estimate of ¥2.35 trillion.

Quarter-over-quarter bit shipments will remain roughly flat during the third quarter, Chief Financial Officer Akira Menju said. Sequential average selling prices will also stay flat as negative currency movements offset data center volume, Menju said.

The earnings disclosure does not state the exact revenue split between mobile flash memory and enterprise solid-state drives for the quarter. Kioxia did not publish detailed segment percentages in its initial release.

Kioxia's profit recovery alters competitive dynamics across East Asia's memory supply chain. South Korean rivals Samsung Electronics and SK hynix previously captured early hardware gains through dominance in high-bandwidth memory stacks.

Samsung Electronics and SK hynix also reported tightening enterprise solid-state drive order books through late 2026. The storage bottleneck forced server makers to accept price hikes across all three major Asian producers.

In China, domestic flash maker Yangtze Memory Technologies faces American export restrictions that limit cleanroom tool procurement. Those curbs prevented Chinese producers from filling the enterprise server shortage outside their home market.

Kioxia plans to distribute the interim dividend of ¥90 per share to registered shareholders on Dec. 8, 2026. The company will report third-quarter financial results in early 2027.