TOKYO -- Toshiba Memory on Wednesday marked the opening of a cutting-edge chip fabrication plant, signaling a return to the race against Samsung Electronics and other rivals, but it now faces a changed business landscape weighed down by oversupply.

The heads of Toshiba Memory and Western Digital both attended the opening ceremony for Fab 6 at the Yokkaichi facility in Japan, the first new facility in roughly two years. This marked their first public appearance together after the two men reconciled following the contentious sale of the former Toshiba unit, which was fiercely opposed by its American chipmaking partner.

The two leaders strove to show that fences have been mended. "A lot has happened, but we'll continue joint investment and joint development," said Toshiba Memory President Yasuo Naruke. Western Digital CEO Steve Milligan said the conflict had reminded him of the value of the partnership.

Yokkaichi makes 40% of the world's NAND flash memory chips, used in smartphones and personal computers. The site is funded by Toshiba Memory -- the world's second-largest NAND producer -- and No. 3 Western Digital, which together poured more than 500 billion yen ($4.45 billion) into Fab 6, making it among the largest single investments in the site.

Starting next year, the new plant will produce memory with a higher storage capacity than any other chipmaker has achieved. It will boost the Yokkaichi facility's production capacity by more than 20%.

But much has changed since construction on Fab 6 began in February 2017.

Memory prices had been trending unusually high then, but are now falling back to earth. Shipments of smartphones, a major driving force behind the boom, are plateauing. Demand related to data centers remains brisk, but all told, a 40% annual expansion in NAND supply is outstripping demand.

U.K. research firm IHS Markit predicts that the memory chip market as a whole, including DRAM, will peak this year against the backdrop of declining prices. The so-called supercycle will not go on forever.

The softening market "isn't a fatal blow, but we're uneasy about how far it might go in the second half of the year," Naruke said.

Memory demand is seen as all but certain to keep growing over the long term, thanks to its use in such applications as big data. But all the investment in additional capacity means that the developing supply glut is likely to go on for some time. If trade tensions between the U.S. and China weigh on production of electronic equipment, demand could be dampened further.

The competitive landscape is showing signs of shifting as well. Though the Toshiba Memory-Western Digital alliance remains in a three-way race with Samsung and Micron Technology of the U.S., Chinese players may start to catch up.

Yangtze Memory Technologies, an offshoot of state-backed Tsinghua Unigroup, plans to begin production next year of faster NAND chips based on proprietary technology. Though its technical capabilities are no match for those of Toshiba or Samsung, its financial wherewithal is likely to make it a long-term threat.

Toshiba Memory looks to leverage its technological edge, which is essential from a profitability standpoint as well. The competitiveness of NAND now rests in large part on how many layers of memory cells manufacturers can stack on top of each other. The more layers there are, the less it costs to produce a given amount of storage capacity.

Bain Capital, the U.S. private-equity firm leading the consortium that bought Toshiba Memory, targets an initial public offering for the chipmaker in three years. But a downturn in the NAND market would leave Toshiba Memory with less cash to cover its costs, possibly forcing it to raise more funds from Bain or other sources.

Such a trend could also spell trouble for Toshiba, which retains a 40.2% stake in its former crown jewel and relies on the chipmaker's earnings for vital cash to fund its restructuring.