Memory boom and its negative consequences: Kioxia lost two-thirds of its value

The market value of the Japanese memory chip maker has recently dropped to a third of its peak value from only 4 months ago. The major reason for Kioxia's losses is that the rise in interest rates has threatened the business model of data centers, whereas increased competition from Chinese manufacturers has also had a huge impact.

The sudden drop in revenue value

Only in June of this year, Kioxia was at the top rate of all Japanese companies with its market capitalization of almost $380 billion. However, fairly quickly, the situation has dramatically shifted to a decline to $133 billion. The company’s share fell 14% on October 15, and the decline was also noticed in other semiconductor manufacturers.

The crucial impact was due to concerns about the creditworthiness of CoreWeave (a U.S. cloud service provider) – a huge-scale expansion of data centers is mainly done with the use of borrowed funds. Another huge impact was noticed after the announcement of CXMT’s release of breakthrough technology, which immediately impacted the drop in SK Hynix and Samsung shares.

According to Kioxia's consensus forecast, the net profit for the full fiscal year will reach $35 billion, which is an almost tenfold increase. The company is planning to develop a further strategy that will help to minimize dependence on memory market fluctuations. As of now, they are developing a partnership with Nvidia.

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