SK hynix’s NAND entities report a performance rebound

[Photo by MK DB]

Kioxia Holdings Corp., formerly the memory chip business of Toshiba Corp., and NAND flash memory solutions provider Solidigm achieved remarkable rebounds in the NAND market amid favorable conditions.

The two companies, currently operated by South Korean chipmaker SK hynix Inc., suffered significant losses during the semiconductor downturn but have either returned to profitability or reduced losses.

According to industry sources on Monday, Japanese memory chip maker Kioxia announced that it managed to swing to a profit for the first time in six quarters. The company said in its fiscal fourth-quarter earnings report (Q1 2024) that its sales stood at 322.1 billion yen ($2.06 billion) and operating profit came to 43.9 billion yen. This marks its first profit since the third quarter of 2022 when it recorded an operating profit of 80.6 billion yen.

Japanese companies’ fiscal years end in March and begin in April.

Kioxia was established in 2018 when Toshiba spun off its memory chip business. SK hynix invested 2.7 trillion won ($2 billion) in a fund set up by U.S. Bain Capital and acquired 1.3 trillion won worth of convertible bonds.

Kioxia faced significant management challenges during the first two quarters of 2023, recording a loss of 231.6 billion yen, with these losses reflected in SK hynix’s financial statements. But the company has proven its turnaround with a solid performance, which was boosted by the expansion of AI-driven data center demand. Sales hit 322.1 billion yen in the first quarter of 2024, up 31.4 percent from the same period a year ago.

“NAND prices in dollar terms increased by about 20 percent last year, continuing a three-quarter upward trend, and shipment volumes also increased by 5-9 percent,” the company said.

[Graphics by Song Ji-yoon and Lee Eun-joo]

Solidigm, another challenging investment for SK hynix, is also beginning a rebound.

Acquired from Intel Corp. in 2021, Solidigm faced difficulties due to the semiconductor downturn and U.S. export controls on chip equipment to China, but it has benefitted from the positive trends in the NAND market.

According to SK hynix’s quarterly report, SK hynix NAND product solution posted a net loss of 149.6 billion won in the first quarter of 2024. This is a significant improvement from the net loss of 1.39 trillion won in the second quarter of 2023 and 1.43 trillion won in the third quarter.

SK hynix NAND product solution includes entities established after acquiring Intel’s NAND business.

Solidigm is on the path towards a clear recovery as demand for high capacity eSSDs from data center companies increases. The outlook is bright, particularly due to its NAND-based Quadruple level Cell (QLC) technology, which is essential for implementing the ultra-high-capacity SSDs targeting the AI market.