Kioxia Holdings Corp Raising our price target

Research evidence excerpt

Kioxia Holdings Corp Raising our price target

Kioxia Holdings Corp UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Q: Can the company maintain its industry-leading NAND flash memory operating margin

through 2027?

We expect Kioxia to sustain industry-leading NAND margins versus key peers through CY26–27. This

is because of its clear structural advantages in terms of the manufacturing cost per 1GB. However,

beyond CY27—particularly with the transition to BICS10 (332 layers) and subsequently the 400-layer

generation—it remains uncertain whether this advantage in lateral scaling can be maintained to the

same extent as at the present.

Q: Is AI inference a temporary driver of NAND flash memory demand, as in the case of AI

training, or is it a structural growth driver?

We view AI inference as a sustainable and structural driver of growth in NAND flash memory demand.

For AI inference, NAND flash memory’s performance and capacity are design variables that define

user experience. This role is unlikely to change, in our view.

Q: How long will NAND flash memory prices continue to rise?

We expect supply shortages to persist through 2027, as capacity expansion lags demand growth,

while NAND prices are in a sold upward phase. We forecast that qoq price increases will peak out in

around 3Q 2027.

UBS VIEW NAND flash memory prices are likely to continue rising qoq for the next six quarters before peaking in

Q3 2027 (about 1.5 years from now). Furthermore, by focusing on horizontal miniaturisation

technology, which is not prone to wafer cost increases, the company has established a competitive

advantage in terms of bit cost, one that we expect to persist for several years hereafter.