KIOXIA Holdings: Starts BiCS 10 Production
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Morgan Stanley reports that KIOXIA Holdings (285A.T) has commenced BiCS-10 production at its K2 fab and initiated sample shipments of 1Tb TLC products. BiCS-10 delivers a 33% improvement in interface performance, a 59% increase in bit density, and better power efficiency compared to BiCS-8, designed to meet PCIe Gen 6 and Gen 7 SSD requirements for AI workloads.
The firm notes that KIOXIA expects 80% of its gigabyte output to transition to BiCS-8 by the end of March 2027. Revenue growth in the data center and enterprise storage markets through the first half of 2027 will be primarily driven by BiCS-8 products. Over the medium term, the company targets increasing data center and enterprise revenue contribution from the current 30-40% to over 60%, contingent on the successful commercialization of BiCS-10 SSDs.
Morgan Stanley maintains an Overweight rating with a target price of 110,000 yen, compared to the closing price of 83,300 yen on July 3, 2026, representing 32% upside. The valuation is based on a FY3/28e free cash flow yield of 10% and an implied price-to-earnings ratio of 11x.
Key catalysts to monitor include the certification progress of BiCS-10 products and the capacity expansion pace at the K2 facility. Upside risks involve stronger AI-driven NAND demand and supply adjustments, while downside risks encompass weaker demand and Chinese capacity expansion.