Kioxia Investor Day: First-ever dividend due to AI, tenth-generation flash memory samples to be delivered this summer, with an average annual capital expenditure of 470 billion yen.

The explosive growth of AI inference workloads is transforming Kioxia from a flash memory manufacturer troubled by cyclical issues into a core supplier of data center infrastructure.

At the Investor Day held on June 2nd, Kioxia announced it will implement a progressive dividend policy, marking the company's first commitment to dividend payouts since its listing. Meanwhile, the company disclosed that samples of its tenth-generation BiCS FLASH memory will begin delivery this summer, and planned annual capital expenditure from FY26 to FY28 is about 470 billion yen, a significant increase from FY25.

The announcement of the first-ever dividend opens the door for a new group of investors—institutional investors and Japanese retail investors who require dividends on their holdings can now include Kioxia. According to Bloomberg, Kioxia's stock performance since its end-2024 listing has been lackluster; however, due to the AI market upswing, its stock price has soared more than 30 times in the past year. The company has achieved a net cash position in the first quarter of FY26, with Q1 operating profit margin guidance as high as 74%.

AI Inference Demand Surges, First Dividend Opens Institutional Access

Kioxia defines this dividend policy as "progressive dividends," meaning dividends will gradually increase on a sustainable basis, though specific amounts have yet to be disclosed. The company stated shareholder returns will be linked to multi-year accumulated free cash flow, and adjusted flexibly based on operating environment; excess returns may be considered for additional distributions.

The core logic behind this decision is a fundamental change in demand structure. According to Tech Insights, data center flash memory demand is projected to jump from 295EB in 2025 to 1807EB in 2028, with AI inference demand accounting for 86% of incremental data center growth, and an annual compound growth rate reaching 46%. Regarding supply and demand, the entire FY27 supply-demand pattern is expected to remain tight, and flash memory prices will rise accordingly.

Kioxia noted, the rise of Agentic AI and Physical AI is driving exponential expansion in inference workloads, accelerating the migration of storage demand from consumer end to data infrastructure end. The company aims to increase the proportion of data center revenue to 60% or more by FY28.

Tenth-Generation BiCS FLASH Sample Delivery This Summer, CBA Technology Leads the Industry by Four Years

On the technology front, Kioxia positions the tenth-generation BiCS FLASH (Gen.10) as a key competitive weapon. The company revealed that Gen.10 adopts a 332-layer stacked 1Tb TLC design, with sample delivery targeted for the summer of 2026 and volume production ramp-up to follow.

Compared with the previous BiCS FLASH Gen.8, Gen.10 offers a 59% increase in bit density, 33% increase in interface speed, over 15% improvement in read throughput, over 30% improvement in write throughput, over 40% improvement in read power efficiency, and over 30% improvement in write power efficiency.

Regarding layer count, Kioxia opted for 332 layers instead of some competitors’ pursuit of 400+ layers. Company calculations show that compared to 400+ layer designs, the 332-layer design reduces GB cost by about 23%, improves power efficiency by about 10%, and cell reliability by about 35%, delivering superior overall benefits.

Kioxia’s additional technical advantage stems from early commercialization of CBA (CMOS Direct Bonding Array) technology. The company estimates its CBA application leads U.S. and Korean peers by approximately four years, and expects to achieve 4.8Gbps interface speed by 2029, while other major manufacturers will still be at 3.6Gbps. Kioxia states this will support its continued supply of high-performance, leading-edge products.

Annual Capital Expenditure of 470 Billion Yen, R&D Invested Highly Expanded

On capital allocation, Kioxia plans annual capital expenditure of approximately 470 billion yen from FY26 to FY28, a significant acceleration compared to actual FY25 capex of 28.37 billion yen (about 45 billion yen in FY26, up 60% YoY). Key spending areas include Gen.10 mass production ramp-up, infrastructure construction for next-generation processes, and strengthening back-end processes.

On R&D, the company’s average annual budget for the period is about 23 billion yen, up roughly 63% from FY25, focusing on BiCS FLASH Gen.10/Gen.11 development, ultra-high IOPS solid-state drives, and new memory devices like OCTRAM.

Kioxia has also set strict investment discipline: capital expenditures need to be approved only if projected returns exceed weighted average cost of capital. The company disclosed, as of Q1 FY26, its ROIC over the past 12 months has risen to 31%, significantly higher than the 18% of FY25, with asset efficiency continuously improving.

SSD Product Matrix Aligned with AI Inference Architecture, Data Center Strategy Speeds up Implementation

On the product side, Kioxia has developed a differentiated SSD product portfolio targeting diverse AI inference system needs: high-bandwidth CM series for KV caching scenarios (TLC flash), ultra-high IOPS GP series equipped with XL-Flash (compatible with NVIDIA Storage-Next architecture), and high-capacity LC series using BiCS FLASH Gen.8 2Tb QLC, with maximum capacity of 245TB (already mass-produced).

Chief Strategy Officer Junichiro Yaguchi pointed out that the traditional consumer market is showing stable or slight downward trends, and resources will be increasingly tilted toward the data center. CEO Hiroo Ota stressed Kioxia is shifting from consumer segment’s cyclical drive to AI infrastructure-led stable growth mode, with the introduction of long-term agreements (LTA) enhancing revenue visibility and reducing profit volatility.

Chief Financial Officer Yoshihiko Kawamura stated at Investor Day that the company aims to increase equity ratio to 50% or more (currently around 38%), while steadily increasing shareholder returns while maintaining adequate liquidity. With net cash position established and free cash flow continuing to expand, Kioxia’s capital structure is undergoing substantial transformation.

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