KITAKAMI, Japan, Nov 5 (Reuters) - Bain Capital-backed

Kioxia said on Tuesday it expects demand for flash memory to

increase by about 2.7 times in the five years to 2028 on the

back of the boom in artificial intelligence.

The chipmaker, which was hammered by a downturn in the

market for memory chips, is readying a major capacity expansion

at its new fab at Kitakami in Iwate prefecture, north of Tokyo.

Kioxia, formerly Toshiba Memory, had planned to begin

production at the fab last year but has delayed that to autumn

2025.

The chipmaker has seen years of upheaval including its

carve-out from scandal-hit Toshiba by the Bain-led consortium.

Kioxia also makes chips at Yokkaichi in Mie prefecture in

central Japan and in July said it has begun sample shipments of

its latest generation of NAND flash memory.

The growth of AI is driving investment in servers and the

introduction of AI features is seen as having the potential to

drive renewed demand for smartphones and PCs.

Kioxia has space in Yokkaichi and "by having the Kitakami

factory operating next autumn we should have sufficient room to

respond," Tomoharu Watanabe, executive vice president at Kioxia,

said following a ceremony to offer prayers for the safety of the

new fab.

Bain scrapped plans for an initial public offering for

Kioxia in October after investors pushed it to almost halve the

valuation it was seeking, Reuters has reported.

Kioxia is a test case for buyout firms in Japan and is a key

player as the government looks to revive its formerly world

beating chip industry.

In February, Japan said it would provide subsidies worth as

much as $1.64 billion to Kioxia and partner Western Digital ( WDC )

to expand capacity at Yokkaichi and Kitakami.