Kioxia Launches Fab2 in Kitakami, Reportedly Expects 20% Annual NAND Demand Growth
2025-09-30
According to Bloomberg, Kioxia expects NAND storage demand to grow by about 20% annually, fueled by rising AI data center demand. To address this growth, the company announced the start of operations at Fab2 (K2) in the Kitakami Plant, Iwate Prefecture, Japan. As its press release highlights, Fab2’s production capacity will ramp up gradually in line with market trends, with meaningful output expected in the first half of 2026.
As its press release further indicates, Fab2 is equipped to manufacture eighth-generation, 218-layer 3D flash memory incorporating the companies’ CBA (CMOS directly Bonded to Array) technology, along with future advanced 3D flash nodes, to address surging storage demand driven by AI.
Bloomberg, citing Kioxia Executive Vice President Tomoharu Watanabe, notes that demand is particularly strong from hyperscalers requiring chips for generative AI. He added that the company is reviewing investments on a monthly basis to ensure the new plant can keep pace with this demand.
In addition, as Bloomberg points out, Kioxia has been increasing investment in its key plants in Kitakami and in Yokkaichi, Mie Prefecture, to narrow the gap with rivals Samsung and SK hynix. The company also aims to double memory output at these sites within five years of fiscal 2024, which ended this March, the report notes.
AI Boom Fuels NAND Shortage and Price Hikes
With NAND demand rising sharply on the back of AI, prices are starting to reflect tightening supply and stronger buyer demand. According to TrendForce, over the next two years, AI infrastructure will mainly focus on high-performance inference services. As traditional high-capacity HDDs face significant shortages, CSPs are increasingly sourcing from NAND Flash suppliers, boosting demand for nearline SSDs designed specifically for inference AI and catering to urgent market requirements. The demand is likely to persist into 2027 as inference AI workloads expand, leading to tight supply conditions for enterprise SSDs by 2026.
As TrendForce notes, SanDisk was the first to announce a 10% price increase, while Micron paused quotations due to pricing and capacity issues. These developments shifted supply-side sentiment from cautious to aggressive. Consequently, NAND Flash contract prices across all categories are expected to rise, with an average increase of 5–10% in 4Q25.
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