Shares of Kioxia Holdings fell 15.78% to 11,345 yen in Tokyo on Monday, Nov. 2, after the flash memory maker forecast that revenue and profit would barely grow in the October-December quarter, according to closing data reported by Aju Press. Tokyo Electron, Japan's largest chip equipment maker, moved the other way, rising 5.16% to 10,005 yen after it published its first full-year forecast and set up a share buyback of up to 150 billion yen.

The split matters for investors across Asia because Kioxia and Tokyo Electron sit on opposite sides of the AI build-out. Kioxia sells memory whose prices have surged on data center demand. Tokyo Electron sells the machines chipmakers buy to add capacity. Monday's trade suggested investors are rewarding companies with visible order books and punishing any sign that the memory price boom is leveling off.

The benchmark Nikkei 225 slipped 0.33% to 63,081.86, Aju Press reported. The Associated Press said Kioxia had dropped roughly 14% during the session as its forecasts disappointed some analysts. Aju Press noted that the Philadelphia Semiconductor Index fell 7.2% in New York on Friday as earnings revived concerns about heavy AI spending.

Kioxia guides to a flat quarter

Kioxia's results, released on Friday, Oct. 30, were strong on their own terms. Revenue for the July-September quarter reached 2,480.0 billion yen, up 712.9 billion yen from the April-June quarter, which the company attributed mainly to a sharp rise in average selling prices. Non-GAAP operating profit rose to 1,988.3 billion yen from 1,326.2 billion yen.

For the six months to September, revenue rose 436.8% from a year earlier to 4,247 billion yen, and profit attributable to owners climbed to 2,198 billion yen from 59 billion yen.

The problem for the stock was the next quarter. Kioxia forecast October-December revenue of 2,500.0 billion yen, an increase of only 0.8%, and non-GAAP operating profit of 2,000.0 billion yen, up 0.6%. The company said data center demand should stay strong but that factors including currency moves would leave results broadly in line with the second quarter. Its outlook assumes 157 yen per dollar, against an average of 161 yen in the July-September period.

Kioxia also said demand from smartphone and PC customers is trending down, while demand for AI servers and enterprise storage keeps the overall flash market growing.

The company paired the results with its first dividend. It will pay an interim dividend of 90 yen a share (on a pre-split basis; Kioxia executed a 3-for-1 stock split on Oct. 1), totaling 47.9 billion yen and payable Dec. 8. Kioxia said its new policy is to keep a net cash position, buy back shares flexibly and raise dividends progressively, and that over the medium to long term it will return 100% of excess funds to shareholders. The payout did little to steady a stock that was already hit in October's selloff in Japanese chip names.

Tokyo Electron sets a 50.6% profit forecast

Tokyo Electron reported net sales of 1,667.5 billion yen for the six months to September, up 41.3% from a year earlier, with net income up 56.0% to 376.9 billion yen. The company said both sales and every profit line beat the forecast it had issued in July, as capital spending on chips for AI applications rose sharply.

It also issued a full-year forecast, which it had previously left undetermined. For the year ending March 2027, Tokyo Electron expects net sales of 3.7 trillion yen, up 51.4%, operating income of 1,169 billion yen, up 87.1%, and net income of 865 billion yen, up 50.6%. The company cited expanding demand for AI servers in data centers.

The buyback facility allows Tokyo Electron to repurchase up to 25 million shares, or 1.1% of shares outstanding excluding treasury stock, for as much as 150 billion yen between Nov. 1 and March 31, 2027, through market purchases on the Tokyo Stock Exchange. The company already spent 150.0 billion yen on its own shares in the first half, according to its cash flow statement.

It raised its interim dividend to 415 yen a share from the 384 yen it forecast in July, against 264 yen a year earlier. The company targets a payout ratio of around 50% of net income. Tokyo Electron carried out a 5-for-1 stock split on Oct. 1, and the interim dividend is quoted on a pre-split basis.

Mixed signals across Asia's chip names

The divergence was not limited to Tokyo. In Seoul, SK Hynix rose 3.81% and Samsung Electronics gained 1.78% as the Kospi rebounded 2.24%, while in Taipei, TSMC fell 1.69%, Aju Press reported. SK Hynix reported record third-quarter operating profit last week.

Kioxia files its semi-annual securities report on Nov. 6 and pays its first dividend on Dec. 8. Tokyo Electron's buyback window opened on Nov. 1, and its interim dividend is payable on Nov. 27.