Shares of KIOXIA Holdings slid 8% to ¥59,160 on July 24 after reports surfaced that Apple is exploring memory-compression technology that could cut the amount of NAND flash and DRAM its devices need. The selloff spread across the memory sector, with DRAM stocks dropping over 4%, as investors questioned whether the biggest demand story in semiconductors — the AI-fueled memory shortage — faces a software-driven speed bump.
Apple Is Trying to Engineer Its Way Around Expensive Chips
Reports suggest Apple is exploring a collaboration with a firm called PrismML that specializes in memory compression — software that shrinks AI models so they run on iPhones with less physical memory, letting Apple cut component costs on some devices while reserving premium hardware for higher-priced models.
Apple is not alone: AMD, Marvell, and SanDisk are all pursuing architectural solutions to reduce reliance on costly memory rather than simply adding more hardware. For KIOXIA, whose NAND chips sit inside iPhones, Macs, and data centers, even a modest per-device reduction across Apple's hundreds of millions of annual shipments could matter at the margin.
KIOXIA's Near-Term Fortress Is Intact — For Now
KIOXIA confirmed as early as February that all of its 2026 NAND capacity had been locked in by customers, with some hyperscale clients requesting supply through 2028.
Revenue rose 37% to ¥2.34 trillion for fiscal 2025, while operating profit nearly doubled to ¥876 billion.
The company's own outlook calls demand "extremely strong," citing AI inference, server replacement, and hard-drive shortages pushing buyers toward NAND-based storage. Today's compression headlines threaten future demand, not current contracts.
The Real Risk: A Narrative Shift After a Monster Rally
KIOXIA's stock has halved from its peak, while Samsung and SK Hynix have each shed about a third of their value as Asia's AI chip rally cools.
Yet 16 analysts still rate the stock a "Buy" with an average 12-month target of ¥113,988 — roughly double today's price. The gap between analyst optimism and market reality reflects a tug-of-war: record profits versus growing fears that software efficiency could erode the volume growth memory makers are banking on.
Bottom Line for Shareholders Memory compression won't dent KIOXIA's fully booked 2026. But it signals a strategic shift: the world's largest device maker is actively working to buy less of what KIOXIA sells. Micron's CEO has warned the shortage will extend beyond 2026, with new capacity not meaningfully online until 2028. That gives KIOXIA time — but not forever.