⚠ Subsidised Capacity Is Being Built EverywhereModerate threat

A subsidy is worth something only if your competitors do not have one, and by 2026 they all do.

The United States, the European Union, China, Korea, Taiwan, India and Japan have all committed public money to semiconductor manufacturing. When every producer's capital cost is reduced by its own state, the relative cost position is unchanged and the absolute level of capacity is higher than commercial logic would have produced. That is a worse outcome for a commodity industry than no subsidies at all.

The version of this that matters most to Kioxia is China. YMTC went from about 8% of NAND revenue to about 13% in a year¹, funded in a way that does not require a competitive return, and that capacity does not withdraw when prices fall.

The offset is that Japan's grants are tied to plants that already exist and to a producer already at scale, which is a more efficient use of the money than building an industry from nothing.

Watch the ratio of grants to capital spending across the industry rather than at Kioxia. The question is not whether Japan pays, but whether everyone pays more.