Japan to give $1.64 billion in subsidies to Kioxia and WD to boost NAND memory chip production

Japan's industry ministry announced that it will be adding more subsidies for Kioxia and Western Digital, promising 242.9 billion yen (US$ 1.64 billion) to build two state-of-the-art facilities to mass produce NAND memory chips and fulfil the needs for AI and data center applications. This includes 92.9 billion in subsidies previously approved in 2022, so there's an additional 150 billion yen overall.

Once construction is completed in the Mie and Iwate prefecture, the facilities will make 218-layer 3D NAND chips for the respective markets. The ministry believes that with this investment, it would reclaim its reputation as a major chip manufacturing hub.

This will also enable the country to secure chip supply as trade relations between China and the United States remain tense. Industry Minister Ken Saito told Reuters, "The more data is used, the more memory consumption will increase so in that sense global demand will surely grow in accordance with NAND's characteristics." He also stated, "Japan and the US will work together to fulfil the responsibility of supplying memory products needed by the world."

Western Digital and Kioxia were planning to merge a few months ago, but SK Hynix objected a few days after the announcement as the proposal would undervalue its investment, leading to the merger plans being cancelled the next day. Regardless, Japan has had its own goals in place with these companies since 2022, so it increased the subsidies to help overcome the downturn in the NAND market that occurred last year.

A gold rush in the NAND market?

The need for higher-performing and higher-capacity memory has always created a certain demand from the worldwide market, but with the ever-growing use of generative AI and data centers around the world, the demands must be met. Japan also believes that it will generate 9,000 jobs in the region as a result of this investment.

It's common for countries to subsidize and invest in manufacturing facilities for leading companies. Through these plants, shipments are expected to begin in September 2025, though experts believe it could take longer.

The United States has also been doing the same with Intel, Samsung, and SK Hynix. Under the CHIPS Act, Samsung and SK Hynix can only operate their existing facilities in China, while newer facilities will be made in the United States. Intel and TSMC are also getting subsidies from the United States for near-future plants. The U.S will also be a major hub for GPU packaging, as Nvidia will also be using Intel's foundry for GPU packaging production.

Japan, the U.S., and other countries are all aiming to boost chip manufacturing facilities in their respective regions, aiming to dramatically decrease dependency on plants located in China. But even with sanctions, China is making its plans to secure its future in generative AI applications for multiple fields, though Intel CEO Gelsinger claims China will remain ten years behind for the foreseeable future.