Kyocera Corporation (TOKYO:6971), based in Kyoto, has once again delayed the start of operations at its newly constructed factory in Satsumasendai, Kagoshima Prefecture. Initially slated to begin operations in October 2023, the plant will now target a new operational date of October 2027, according to a statement made by the company to the city of Satsumasendai on January 21, 2025. This marks the second time the factory's launch has been delayed.

The factory, the largest domestic manufacturing facility for Kyocera, is set to produce semiconductor components, specifically organic packages. According to the city, the factory's internal construction is expected to be completed by June 2025, but due to the ongoing sluggish demand in the market, Kyocera has opted to postpone its operations until further notice.

Kyocera's explanation for the delay includes a decline in demand for organic semiconductor packaging, particularly for CPUs used in data centers. The company stated that the delay in internal construction, partly due to labor shortages, has further compounded the issue. Despite the delay, Kyocera remains committed to the project, emphasizing that the focus on CPU packaging remains a key strategy and that demand could recover in the future. The factory, with a floor area of 65,530 square meters, was initially set to begin operations in October 2023 but has already been postponed twice.

This setback comes as Kyocera rethinks its strategy in the face of evolving demand. While initially planning to increase production for data centers with 5G infrastructure, the shift towards artificial intelligence (AI)-focused data centers powered by GPUs has shifted market needs away from Kyocera’s primary CPU-focused packaging. This change in demand dynamics has required Kyocera to reconsider its production priorities.

The total investment in the factory has exceeded ¥80 billion (approximately CNY 3.74 billion or USD 514 million), up from the original ¥62.5 billion, due to soaring material costs. The factory was also expected to create around 400 new jobs, with the company already having hired over 1,000 employees across its Kagoshima facilities since April 2022. Despite the delays, Kyocera has assured that it is managing the situation through internal transfers and adjustments.

While the city of Satsumasendai was informed of the delay in August 2024, it remains hopeful that the factory will begin operations by the newly proposed date of October 2027. The local government has also expressed its desire for the plant to open as soon as the market conditions improve.

Kyocera’s commitment to the new facility underscores its focus on the growing demand for semiconductor components driven by trends in smart automotive technology, 5G communication infrastructure, and the increasing digitalization of industries. While the initial delays have impacted the timeline, the company’s long-term vision for the plant remains intact, with hopes for future growth aligned with global demand shifts.