TOKYO (Kyodo) -- Japanese chipmaker Kioxia Holdings Corp. debuted on the Tokyo stock market Wednesday, closing more than 10 percent above its initial offering price in Japan's second-largest listing this year by market capitalization.

Kioxia was valued at around 863 billion yen ($5.6 billion) based on its closing price of 1,601 yen. The shares first changed hands at 1,440 yen, below the IPO price of 1,455 yen, but later gained momentum.

The company plans to use the IPO proceeds to fund research and development to meet the expected long-term demand for chips used in artificial intelligence. Only the October listing of railway operator Tokyo Metro has been larger on the Tokyo bourse this year.

Kioxia President Nobuo Hayasaka said at a press conference that the company plans to expand its range of products for data centers and AI applications.

"We have confidence in our competitive advantages, such as technological strength and production efficiencies. We want to further enhance those strengths," he said.

Regarding a potential merger with U.S. peer Western Digital Corp., with which Kioxia operates a chip plant in Japan and once held merger talks, Hayasaka said there are "no discussions progressing currently" on the matter.

Kioxia, a leading producer of NAND flash memory chips used in computers, smartphones, and other digital devices, launched its IPO amid a downturn in the market for NAND components.

Prices for key NAND products have declined significantly from their April peak due to weaker-than-expected demand for personal computers and smartphones, which has increased inventory levels and curbed chip buying, according to industry analysts.

Kazuyoshi Saito, a senior analyst at Iwai Cosmo Securities, described the debut as "a calm start" but said the afternoon jump in shares was "puzzling," given the challenging market environment.

"The timing of the IPO coincides with a slump in the NAND flash market, leaving many investors cautious. The stock is likely to trade near its offering price in the short term, with limited room for upward movement," Saito said.

But Kioxia's long-term outlook appears more positive. Analysts expect a recovery in demand for AI-related devices and consumer electronics, such as PCs and smartphones, to boost the NAND flash memory market next year.

"Coupled with recovering demand from data centers, market conditions and Kioxia's performance are likely to improve by the second half of 2024," Saito added.

The company, which was formerly Toshiba Corp.'s memory chip business, issued 21.56 million new shares in going public to secure about 29 billion yen.

Major shareholders Bain Capital, a U.S. private equity firm, and Toshiba sold part of their stakes, with Bain's ownership falling from 56 percent to 51 percent and Toshiba's from 40 percent to 30 percent.

In 2018, Toshiba sold its former chip-making unit, Toshiba Memory Corp., to a consortium led by Bain Capital for around 2 trillion yen as part of its restructuring efforts. The chip company was later renamed Kioxia.

The company gained approval in 2020 to go public, but it repeatedly postponed its listing as heightened U.S.-China trade tensions clouded its business outlook. Its market capitalization at the time was estimated at over 1.5 trillion yen.