Samsung and SK Hynix still have one advantage Japan can't match, says Kioxia dealmaker

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Huileng Tan

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Yuji Sugimoto, managing director of Bain Capital Private Equity, speaks during a news conference in Tokyo, Japan.

Yuji Sugimoto led Bain Capital's acquisition of Toshiba Memory, now known as Kioxia.

Shiho Fukada/Bloomberg/Getty Images

Kioxia may have become Japan's most valuable company amid the AI boom, but South Korea's chip giants still hold a structural edge, according to the Bain Capital executive who led the company's buyout from Toshiba.

"The reason South Korean companies are so successful in the semiconductor industry is the powerful top-down leadership and ownership structures of the chaebol conglomerates like Samsung and SK," Yuji Sugimoto, Bain Capital's Japan representative, told Nikkei in an interview published on Wednesday.

"In semiconductors, if you can't commit, you fall behind and it's game over. I think it's difficult to manage that kind of business under the governance of large Japanese corporations," he added to the media outlet.

Sugimoto led Bain's acquisition of Toshiba Memory, which was spun off from Toshiba in 2017 before being bought by a Bain-led consortium for about 2 trillion yen in 2018. The company was renamed Kioxia the following year.

Sugimoto said Kioxia's turnaround would not have been possible had it remained under Toshiba.

"It would have been impossible to keep making massive investments while also posting huge losses. Other divisions in the company would have opposed it," he said.

Bain's kept investing through the memory downturn even as Kioxia's losses mounted, and the move ultimately paid off as AI-driven demand for memory chips transformed Kioxia's fortunes.

"Back in 2018, the term 'AI' was not widely used, and we certainly didn't foresee or fully understand the kind of demand we're seeing today," Sugimoto said.

Kioxia's shares have risen more than 4,000% since its December 2024 listing.

Bain has since exited its investment, with Managing Partner David Gross telling Bloomberg Television on Thursday that the firm no longer holds a stake in Kioxia.

On Thursday, Kioxia's shares closed 8.3% higher, helping the Nikkei 225 gain 1.4%.

South Korea's Kospi closed 0.6% higher as index heavyweight Samsung Electronics rose 0.2% while SK Hynix closed 5.3% higher ahead of its Nasdaq debut on Friday.

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Huileng Tan

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Huileng Tan is a senior reporter based in Singapore, covering markets, the global economy, commodities, and investing. Her reporting focuses on how shifts in money, demographics, technology, and policy are reshaping businesses, wealth, and everyday life around the world.Since joining Business Insider in 2021, she has covered everything from commodity booms and investor trends to China's economy, the AI trade, and the forces driving global markets.Before joining Business Insider, she reported for CNBC, Dow Jones, ICIS, and The Wall Street Journal.In 2018 and 2019, she won the Singapore Exchange Orb Awards for Story of the Year – Derivatives for her reporting on the global commodities and derivatives markets.Reach her at [email protected].