The industry ministry said on Tuesday it would extend subsidies worth as much as ?242.9 billion ($1.64 billion) for Bain Capital-backed Kioxia and Western Digital to expand memory chip production in Mie and Iwate prefectures.
The funding provides underpinning for the two companies, which have been hammered by a slump in the market for NAND flash chips and whose merger talks stalled late last year following opposition from Kioxia investor SK Hynix.
Japan¡¯s powerful industry ministry aims to reclaim the country¡¯s lost position as a major chip center by extending subsidies to domestic and foreign chipmakers and secure chip supply amid trade tensions between China and the United States.
¡°The memory market is expected to grow significantly in the future, including for generative AI (artificial intelligence),¡± industry minister Ken Saito told reporters.
¡°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,¡± he said.
SK Hynix has emerged as a major beneficiary from investment in generative AI, with U.S. chipmaker Nvidia using the South Korean firm¡¯s high bandwidth memory (HBM) chips.
Kioxia was spun off from Toshiba, which invented NAND in the 1980s when Japan was a dominant player in global chipmaking.
¡°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,¡± an industry ministry official said.
Western Digital, whose shares have gained 12% year-to-date, has said it plans to spin off its flash memory business.
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