China's Memory Chip Ambitions Trigger Record Rout in Kioxia Shares
Published on 07/29/2026 at 01:41 | Redaktion boerse-global.de
The Japanese memory chip maker Kioxia suffered its steepest single-day decline on Tuesday, with shares crashing 18.3 percent to ¥44,550 in Tokyo before trading was halted. The bloodbath extended into European hours, where the stock fell another 11.97 percent to €234.95, extending a slide that has now erased roughly 60 percent of the value since the June 22 peak of ¥111,250.
The selloff was triggered by a one-two punch from China's rapidly advancing semiconductor sector. On Monday, domestic memory chip manufacturer CXMT made a spectacular debut on Shanghai's STAR Market, with shares surging 465.82 percent above their ¥8.66 IPO price. The rally briefly propelled CXMT past Industrial and Commercial Bank of China as the mainland's most valuable company, with a market capitalization of ¥3.28 trillion. Adding to the anxiety, reports emerged that Shanghai Yuliangsheng has begun mass production of immersion DUV lithography machines — technology long dominated by Dutch giant ASML — with five units slated for delivery this year and 20 planned for 2025.
Analysts were quick to connect the dots. Lee Gyeong-min of The Herald Business noted that CXMT's blockbuster listing has revived old fears about Chinese capacity expansion in the memory chip space, even as multiple observers cautioned that CXMT remains overvalued and roughly two technology generations behind its competitors.
The contagion swept across Asia's semiconductor complex. Japan's Nikkei 225 tumbled roughly 3.95 percent to 62,364.92 points, while South Korea's Kospi plunged 10.84 percent, triggering its eighth circuit breaker of the year. Samsung lost 13.39 percent and SK Hynix dropped 14.65 percent. Among major memory manufacturers, Kioxia bore the heaviest losses. Tokyo Electron, Advantest, and Renesas each shed 10 to 11 percent, while Lasertec cratered more than 14 percent. Bloomberg's Asia chip index fell roughly 7.5 percent, and six major memory chip stocks on Wall Street collectively lost an estimated $541 billion.
Should investors sell immediately? Or is it worth buying Kioxia?
The rout was compounded by broader skepticism about the sustainability of the artificial intelligence investment boom. Reports surfaced that Nvidia is considering a $250 billion commitment to backstop an OpenAI project, raising concerns about circular financing structures in the AI ecosystem. Nvidia's own shares had already weakened in prior sessions, adding to the sector's fragile sentiment.
Kioxia's descent, however, did not begin Tuesday. The stock had already fallen 16.1 percent on July 17, and by the time trading resumed this week, the decline from the June 22 high had reached roughly 45 percent. The complete exit of Bain Capital from its Kioxia stake, finalized by July 8, added further pressure, while market observers pointed to the unwinding of retail leveraged positions as a key driver of the violent price swings.
The technical picture now screams oversold. The Relative Strength Index stands at 34.6 to 34.8, depending on the exchange, and the stock has lost more than half its value in 30 days. Annualized 30-day volatility has surged to 167.11 percent — a level that makes any leveraged product a hair-raising proposition. Reports that Tuttle Capital is preparing a single-stock leveraged certificate on Kioxia for the U.S. market, the first such product based on a Japanese underlying, underscore just how extreme the price action has become.
Yet the fundamental narrative remains strikingly at odds with the market's panic. Kioxia reports first-quarter fiscal 2027 earnings on July 31, with analysts expecting net profit of ¥948.99 billion against the company's own guidance of ¥869 billion. For the full fiscal year, consensus estimates call for net income of ¥5.3018 trillion — a figure that would surpass SoftBank's record ¥5.023 trillion profit. Revenue has topped ¥1 trillion, gross margins run at roughly 66 percent, and free cash flow exceeds ¥241 billion. S&P Global recently upgraded Kioxia to BBB-, and the expected EBITDA for fiscal 2026 stands at roughly ¥6 trillion, five times the prior year's figure.
Kioxia at a turning point? This analysis reveals what investors need to know now.
The average analyst price target of ¥116,768.75 implies upside of 162.1 percent from Tuesday's close. Speculation about a potential stock split and dividend announcement continues to circulate, while the margin-trading ratio recently stood at 36.75 times. For SK Hynix, which invested roughly ¥3.9 trillion in Kioxia through a Bain Capital-led consortium in 2018, the stake is now expected to contribute an extraordinary gain of about ¥40 trillion to pretax profit in the second quarter, according to Money Today, with Meritz Securities estimating total pretax profit at ¥101.8 trillion.
Kioxia also plans to list American Depositary Shares in the United States by spring 2027, potentially broadening access for Western retail investors. Whether that access arrives in time to catch a rebound — or merely offers a new way to ride the volatility — will depend heavily on what management reveals when it reports earnings this Friday.
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