[News] Kioxia’s Post-Earnings Challenges: QLC Transition Lag, SK hynix’s Arms-Length Stake

As Japan’s Kioxia posted weak September earnings in mid-November, its challenges amid the AI boom and rising memory rivals drew attention. DealSite suggests the company faces hurdles in boosting profitability and QLC competitiveness, while industry observers cited by the report say SK hynix treats Kioxia as a financial investment with limited collaboration potential.

In its latest earnings report released on November 13, the company posted a net profit of ¥40.7 billion for Q2 FY2025 (July–September), marking a 62% drop compared to the same period last year. Industry sources attribute the earnings miss primarily to product mix shifts, noting that seasonal smartphone demand drove lower-margin smart device products to 35% of sales.

DealSite notes that though shipment volumes rose compared with the previous quarter, lower average selling prices (ASP) weighed on Kioxia’s results. Kioxia typically ships a higher share to mobile customers like Apple in September, which pulls down the overall average price, the report adds.

Long-Term Pressure Mounts on Kioxia amid QLC Transition

While Nikkei suggested Kioxia may have hit bottom after its 74% profit drop in Q2, DealSite notes that certain long-term challenges still remain. As other memory giants speed up the transition toward quad-level cell (QLC) enterprise solid-state drives (eSSDs), the report notes that Kioxia has historically focused on triple-level cell (TLC) processes with strengths in consumer SSDs rather than eSSDs.

According to Sisa Journal, SK hynix has developed its 9th-generation, 321-layer QLC NAND and plans to supply eSSDs to major data centers in 2026. The company is also reportedly developing the PS1101, a fully in-house SSD built with the same 321-layer V9 QLC NAND, offering 256TB total capacity (245TB usable) and expected to hit the market next year. Notably, Sisa Journal highlights that the PS1101 succeeds the PS1010, SK hynix’s customized storage solution for clients including NVIDIA.

DealSite notes that with market leader Solidigm (SK hynix) rapidly expanding its QLC lineup, Kioxia must accelerate its efforts to stay competitive. Its 122TB high-capacity eSSD for North American hyperscale data centers is nearing certification, with shipments planned by year-end, while a 245TB model is set for early certification and mass production next year, the report adds.

Equity Ties Without Business Ties

However, the report also brings up that although SK hynix holds an indirect equity stake in Kioxia, there are currently no active business discussions between the two. DealSite reports that SK hynix owns about 19% of the consortium and holds convertible bonds that could raise its stake by another 14.4%, bringing potential ownership to roughly 34%.

As competitors in the NAND market, both companies are racing toward QLC adoption, with minimal overlap in next-generation technologies such as high-bandwidth flash (HBF), which vertically stacks NAND chips to overcome high-bandwidth memory (HBM) limits, as noted by DealSite. While SK hynix is co-developing HBF with SanDisk, Kioxia confirmed in its Q2 earnings call that it is not pursuing HBF development, the report adds.

Read more

• [News] Kioxia Quarterly Profit Tumbles 62% YoY, But Signals Bottom with Record 3QFY25 Sales Forecast
• [News] High-Capacity SSDs Reportedly Hit Year-Long Delays as Samsung, SK, and Kioxia Run Full Tilt

(Photo credit: Kioxia’s X)