TOKYO, July 9 (Reuters) - Private equity firm KKR plans to cut its stake in Kokusai Electric, two people familiar with the matter said, cashing in after a blistering run for shares in the Japanese chip equipment maker.

KKR, which holds around 43% of Kokusai's shares, plans to sell about half of its stake to investors, one of the people said.

Kokusai will buy back shares in the market, the person said.

A 20% stake in Kokusai is worth roughly $1.6 billion as at Monday's closing price.

KKR and Kokusai declined to comment.

Shares in the manufacturer of deposition equipment, which was spun out of Hitachi Kokusai Electric in 2018, have roughly tripled since an initial public offering in October.

Kokusai, which was originally part of Hitachi, has been a test case for private equity in Japan as conglomerates shed non-core assets and companies go private.

With chips seen as underpinning technological innovation including the growth of artificial intelligence, Kokusai has been buoyed by demand for shares of chip equipment makers.

Kokusai, which reported sales of 181 billion yen ($1.12 billion) in the year ended March, has medium-term targets of 330 billion yen or more in sales and adjusted operating margin of 30% or more.

KKR sought to sell Kokusai to U.S. chip competitor Applied Materials in 2019. The deal was terminated after failing to achieve regulatory approval in China.

Applied has a 15% stake in Kokusai.

Kokusai also competes with Tokyo Electron, whose shares have risen by almost 50% in the year to date. It is exposed to the memory sector and analysts see scope for further expansion in logic. ($1 = 160.9400 yen) (Reporting by Sam Nussey; Editing by Christopher Cushing)