Will the World’s Most Successful Stock List U.S. Shares?
This Japanese chipmaker, which has produced world-leading stock performance since its debut in late 2024, would be following the example of Hynix in seeking a U.S. listing.
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Will U.S. investors be able to buy the most successful stock in the world? And should they want to, or is the chipmaker already priced for perfection?
Tokyo-based Kioxia Holdings (T:285A) (KXIAY) confirms that it is considering a stock sale on Wall Street. The memory-chip maker has seen its shares soar 395.9% this year alone, and by more than 1,000% in the last 12 months. Since its debut in December 2024, its stock has been the best performer worldwide.
An Official Listing
Kioxia has over-the-counter shares trading under the ticker KXIAY. But they are unsponsored, meaning they’re not associated with the company, and guaranteed only by the depositary banks that offer them.
Kioxia states today that it is “preparing to list American Depositary Shares representing its common shares on a U.S. stock exchange to steadily and sustainably increase corporate value.”
It is responding to reports that it is looking to sell $10 billion in stock. While confirming that these reports have the underlying grain of truth, it indicates that nothing it settled yet in terms of offer size or timing.
Whatever the details, it would still benefit U.S. tech investors keen to access one of the most exciting overseas semiconductor stocks.
Issuing official American Depository Shares (normally still shortened as ADRs or receipts) would link the U.S. shares officially to the company, give holders voting rights, trade at higher volumes on a major exchange like the NYSE or Nasdaq, and fall under U.S. securities regulation, particularly on English-language U.S. Securities and Exchange Commission filings.
Doing the Wall Street Rounds
Kioxia is talking with investment banks including Bank of America (BAC), Goldman Sachs Group (GS) and JPMorgan Chase (JPM), according to a Bloomberg report, citing “people familiar with the matter” – probably bankers who could be marketing the deal.
The company is eager to improve liquidity in its shares. It actually already indicated in May that it was about to start the Wall Street rounds to list ADRs. Its chief financial officer then indicated at the company’s annual meeting that it was targeting the June 2027 quarter for the U.S. listing. Those plans are apparently now firming up.
Stock Buyback at Home
The company has been buying up its own shares in Tokyo, in a bid to improve shareholder returns. It announced a ¥800 billion ($5.2 billion) buyback on July 31 but said on August 10 that it had already completed the repurchase program within a week. It will also complete a 3:1 stock split on September 30 to reduce the per-share price, as another way to diversify its shareholder base.
Kioxia specializes in NAND flash-memory chips and solid-state drives (SSDs). Formerly Toshiba Memory, the unit was carved out of Toshiba in 2017 after the electronics conglomerate ran aground financially, then was taken over the following year for $18 billion by a consortium led by private-equity investor Bain Capital.
That group, also including Apple (AAPL), Dell Technologies (DELL) and the Korean chipmaker SK Hynix (SKHY) (KR:000660), oversaw the identity change to Kioxia Holdings, a name based on a combination of the Japanese word for “memory,” kioku, with the Greek term axia, meaning “value.”
How About a 3,500% Share-Price Gain?
Kioxia then re-listed the company in Tokyo in 2024 at ¥1,455. Bain confirmed this July that it has completely exited its position in Kioxia, which has generated spectacular returns. Kioxia shares closed Tuesday at ¥51,750, up almost 3,500% from the listing price (3,456.7% to be exact).
Toshiba was forced to shed the business due to unrelated reasons: in the aftermath of a massive accounting scandal, and after the company booked a $2.3 billion writedown on its U.S. nuclear unit Westinghouse.
But Kioxia was also operating in a corner of the chipmaking market that was not particularly sexy. Memory makers had been contending with a downturn in prices, a commoditized product, and a glut of memory on the market.
Its Japanese listing coincided almost exactly with a rebound in commodity NAND and DRAM chips. Since the 2024 debut of its shares, Kioxia has been the best-performing component of the Nikkei 225 blue-chip index, and indeed in the entire MSCI World Index.
A Booming Market
Kioxia has 14% of the market for NAND chips, according to the latest report from Counterpoint, good for fourth place. The market is booming, with sales up up 90% in Q1 and 70% in Q2, as supply constraints boost prices.
Its competitors include Samsung Electronics (KR:005930) (the market leader with 28% share), Hynix (at 19%), and Micron Technology (MU) (15%). Kioxia would be following the example of Hynix in seeking a U.S. listing, which on July 10 raised $26.5 billion by selling ADRs on Nasdaq. That broke the record for a first-time U.S. listing by a foreign company.
The Hynix shares have been trading at a huge premium on Wall Street, as I explained in a recent column, indicating the strong preference among U.S. institutions for holding the shares in their home market. That sees the U.S. shares trading at a 39.6% premium over the Seoul shares, at last count, as this handy tracker shows.
A U.S. listing would also potentially allow Kioxia shares to be included in U.S. indexes such as the Philadelphia Semiconductor Index. That would bring in additional investors, not least of them the creators of index-tracking products such as exchange-traded funds.
Semiconductor Selloff This Summer
This summer has, though, been characterized by specular selloffs in the semiconductor sector. Kioxia shares are down 54.2% from their all-time closing high of ¥109,000, set on June 22.
The stock-price moves of fellow Asian memory makers Samsung Semiconductor and Hynix have followed a similar pattern. They’ve been trading off sentiment on the sector rather than fundamentals.
How else do you describe the selloff Monday prompted by a blog post from Anthropic CEO Dario Amodei, suggesting that model operators “must slow the pace” at which they improve their Artificial Intelligence (AI) models?
It’s a humble brag … “We’re growing so fast it’s dangerous!” And his 3,800-word essay also suggests three very broad-brush responses: that “frontier AI” companies should have embedded third-party evaluators to establish compliance; that the frontier AI companies in democratic countries coordinate on safety standards; and that the United States and other democracies “attempt to coordinate” with authoritarian governments “to the extent this is possible.”
It doesn’t, to my mind, indicate that AI operators will require less memory in the future, just that they must make appropriate use of it. So the knee-jerk selloff in semiconductor stocks and the flight to quality toward the very hyperscalers that are using their chips doesn’t make a lot of sense to me. Microsoft (MSFT), Alphabet (GOOGL) and Meta Platforms (META) all saw their shares advance more than 2% on Monday even as the Philadelphia Semiconductor Index fell 5.9%.
Priced to Perfection?
What does make sense is that, after an almost 3,500% rise, Kioxia shares may be priced to perfection. The company in June briefly became the largest in Japan by market capitalization, as its shares crested toward their all-time high.
But the company issued a disappointing earnings outlook on July 31 as results missed lofty expectations. The company says it intends to increase capacity at a measured pace, only slightly quicker than the industry’s growth rate, to avoid flooding the market with chips.
At the same time, Kioxia has a long-standing partnership with U.S. memory SanDisk (SNDK). The partners said at the end of August that they plan to invest ¥5 trillion ($32 billion) through 2032 to expand production capacity in Japan. Kioxia supplies R&D and manufacturing expertise, while SanDisk gets guaranteed supply and helps with distribution.
We are seeing clear signs that investors worry the AI boost to the semiconductor sector is coming to an end. While global memory capacity is essentially sold out through 2027, the market will be wary of any signs that growth beyond that date is flagging.
I’ll continue watching the memory sector, as I have all summer. A U.S. listing for Kioxia comes with no downsides that I can see, and would broaden the company’s investor base, help with stability in the stock, and improve access for U.S. retail investors.
At the time of publication, McMillan had no positions in any securities mentioned.
