Japan’s Kioxia Holdings, the world’s third-largest NAND flash memory company, applied to list on the Tokyo Stock Exchange on Friday, making it the largest stock debut since SoftBank in 2018.

Now keen attention is being paid to SK hynix, the world's No. 2 maker of memory chips, which has invested 4 trillion won ($3 billion) in the Japanese rival.

With the aim for an October initial public offering, Kioxia is expected to achieve a market capitalization of over 1.5 trillion yen ($10.4 billion), marking the bourse's largest IPO so far this year. Kioxia aims to use the proceeds to meet surging demand for memory chips from the artificial intelligence boom.

Kioxia was established in 2018 as a spinoff from Toshiba’s memory division. At that time, a consortium led by US-based private equity firm Bain Capital, in which SK hynix participated, invested in Kioxia, currently holding a 56 percent stake. SK hynix invested 2.7 trillion won in the consortium and an additional 1.3 trillion won in Kioxia convertible bonds, totaling 4 trillion won.

According to industry sources, both Bain and Toshiba plan to reduce their holdings in stages after Kioxia lists.

If the consortium decides to sell its shares, SK hynix is expected to be able to recover funds by selling a portion of its shares as well.

KB Securities picked SK hynix as the biggest beneficiary of the upcoming listing of Kioxia and said it is expected to see an investment recovery and strategic cooperation between the two chipmakers.

“SK hynix currently holds a 19 percent stake in the Bain Capital consortium that owns part of Kioxia and has secured a convertible bond that allows it to acquire an additional 15 percent stake in Kioxia. As a result, it could potentially increase its ownership in Kioxia to 34 percent, with an estimated equity value of 4.7 trillion won,” said Kim Dong-won, an analyst at KB Securities.

“SK hynix is expected to recover its initial investment by selling some shares after Kioxia is listed. Additionally, there will be opportunities for strategic collaboration with Kioxia in the future through holding shares,” he added.

Kim further added that the listing of Kioxia is anticipated to have a limited effect on the NAND supply since the enterprise solid-state drive market, where demand is growing rapidly, is predominantly controlled by SK hynix, which is ranked second, and Samsung Electronics, which is ranked first. This market is characterized by an oligopolistic supply structure.

Initially, Kioxia had planned to go public in 2020, but the plan was delayed due to market uncertainty caused by heightened trade tensions between the US and China.

An improving business environment has revived its push to go public. Kioxia's net profit for the second quarter of this year hit its highest figure on record for the April-June period at 69.8 billion yen, buoyed as demand for smartphones and PCs -- the main markets for memory -- bottomed out.

According to Taiwan-based market analyst firm TrendForce, Kioxia ranked third in the global NAND market during the first quarter of this year, holding 12.4 percent of the market. Samsung Electronics came in at No. 1 with 36.7 percent, while SK hynix held the second position with a 22.2 percent market share.