Summary of J.P. Morgan's Analysis on Electronic Components Sector Industry Overview - The report focuses on the electronic components sector, specifically analyzing trends in HDD (Hard Disk Drive) and SSD (Solid State Drive) production as of December 2025, with a particular emphasis on data center storage capacity expansion [1][8]. Key Insights HDD Production Trends - HDD production volume reached **11.3 million units** in December 2025, marking an **11% YoY increase** but a **0.3% MoM decrease** [6]. - Nearline HDDs accounted for **6.7 million units** (+15% YoY, -2% MoM) [6]. - HDD production capacity was **158.5EB**, reflecting a **32% YoY increase** but a **5% MoM decrease** [6]. - High-capacity nearline HDDs (24TB or larger) constituted approximately **68%** of total production [6]. - The total HDD production volume for **full-year 2025** was **129.5 million units** (+7% YoY), with nearline HDDs making up **74.8 million units** (+68% YoY) [6]. SSD Production Trends - SSD production volume was **31.9 million units** in December 2025, representing a **13% YoY increase** but an **8% MoM decrease** [3]. - Enterprise/data center SSDs accounted for **5.6 million units** [3]. - SSD production capacity reached **51.1EB**, a **54% YoY increase** but a **0.2% MoM decrease** [7]. - The average capacity of enterprise SSDs increased to **5.5TB** [7]. - For the full year 2025, SSD production volume totaled **375.0 million units** (+17% YoY), with enterprise SSDs accounting for **56.5 million units** (+41%) [9]. Market Dynamics - Demand for enterprise SSDs is primarily driven by data centers, particularly from hyperscalers, with inquiries increasing from major server manufacturers like Dell/EMC and HPE [9]. - The report indicates that while short-term memory shortages and price surges may negatively impact end-user demand and share prices, the medium-term growth potential remains strong [1]. Recommendations - J.P. Morgan recommends buying shares of TDK, identified as a top pick among HDD electronic components makers, especially during price dips [1]. Additional Insights - The report highlights a gradual upward trend in HDD production volume, which has outperformed the typical seasonal decline seen over the past 20 years [6]. - The share of SSDs in total capacity has been increasing, reaching **17.4%** in December 2025, up from **16.3%** in November 2025 and **13.3%** in December 2024 [9]. - The total production capacity for enterprise HDDs, nearline HDDs, and enterprise/data center SSDs was **176EB** in December 2025, reflecting a **39% YoY increase** [9]. This comprehensive analysis provides a detailed overview of the electronic components sector, particularly focusing on HDD and SSD production trends, market dynamics, and investment recommendations.

Summary of Conference Call on Electronic Components Industry in Japan Industry Overview - The focus is on the electronic components industry in Japan, specifically regarding HDDs (Hard Disk Drives) and SSDs (Solid State Drives) for data center (DC) use [1][3]. Key Points HDD and SSD Volume Growth - **DC-use NL HDDs and enterprise SSDs** are experiencing continued volume growth, while **non-NL HDDs and non-enterprise SSDs** remain weak [3][10]. - Total HDD shipment capacity is projected to grow from **1,649EB in 2025** (+31.2% YoY) to **1,869EB in 2026** (+13.3%) [3]. - Total SSD capacity is expected to increase from **498.1EB in 2025** (+38.1%) to **548.8EB in 2026** (+10.2%) [3]. Capacity and Shipment Data - **December 2025** saw enterprise SSD shipments reach **30.63EB**, a significant increase from **16.88EB a year ago** and **28.88EB a month ago** [4]. - For the full calendar year 2025, enterprise SSD shipments totaled **260.80EB**, marking a **57.2% increase** from the previous year [4]. - Forecasts for **2026** predict total shipment capacity of **295.80EB** (+13.4% YoY) for enterprise SSDs [4]. Production and Output Trends - **HDD production** in December 2025 was **11.33 million units**, up **11.0% YoY** but down **0.3% MoM** [11]. - **NL HDD production** for December was **6.71 million units**, reflecting a **14.5% YoY increase** but a **1.8% MoM decrease** [12]. - **SSD shipments** in December were **31.90 million units**, a **13.1% YoY increase** but a **7.6% MoM decrease** [13]. Market Dynamics - The market is expected to remain segmented between SSDs, HDDs, and tape drives, with SSD shipment volume and capacity both increasing sharply YoY [10]. - The total HDD shipment capacity forecast for 2025 is **3.3 times** that of SSDs, indicating that SSDs are unlikely to fully replace HDDs in the near term [10]. Company-Specific Insights - **Seagate**, **WDC**, and **Toshiba** are key players in the HDD market, with varying production forecasts and trends [15]. - Seagate's total HDD production is projected to be **4,350k units** in the upcoming months, while WDC's NL HDD production is expected to reach **2,700k units** [15]. Additional Insights - The transition from non-NL HDDs to SSDs is anticipated, but challenges such as NAND/SSD shortages and rising prices may hinder demand for non-enterprise SSDs [3]. - The overall demand for non-DC-use HDDs and SSDs is expected to remain subdued due to these market dynamics [3]. Conclusion - The electronic components industry in Japan is witnessing significant growth in DC-use HDDs and enterprise SSDs, while non-enterprise segments face challenges. The forecasts indicate a robust capacity increase, but market dynamics suggest a complex landscape for future growth.

Nidec Corporation Conference Call Summary Company Overview - **Company**: Nidec Corporation (OTCPK:NJDC.Y) - **Date of Call**: January 28, 2026 - **Key Speakers**: - Mr. Mitsuya Kishida, President and CEO - Mr. Kazuo Nakagawa, Vice President and CFO - Mr. Masayuki Minai, Vice President and Chief Compliance Officer Core Points and Arguments Earnings Report and Special Alert Status - Nidec apologized for the delay in disclosing Q3 earnings for fiscal year 2025, which led to its stock being placed on special alert by the Tokyo Stock Exchange [2][3] - An improvement plan was submitted to the Tokyo Stock Exchange aimed at reforming internal management and lifting the special alert status [2][3] Improvement Plan and Corporate Reform - The improvement plan is a response to ongoing investigations by a third-party committee, which is expected to provide an initial report by the end of February [3][4] - The plan focuses on fundamental reforms in governance, organizational culture, and internal management systems [4][5] - Nidec aims to establish a corporate culture that prioritizes ethical standards and transparency [5][6] Internal Management and Governance - The company has formed a Corporate Reform Committee to analyze issues and implement the improvement plan [5][6] - Discussions have been held with mid-level employees to foster a culture of open communication and transparency [6][8] - The plan includes measures to address suspected improper accounting practices and improve internal audits and whistleblowing systems [11][12] Financial Performance and Business Operations - Order status remains strong, with no major changes to production plans, particularly in AI-related growth and battery sectors [18][19] - Nidec has ample cash flow and no concerns regarding borrowing facilities, ensuring smooth operations [19] - The company is committed to maintaining business relationships with customers and suppliers despite the ongoing challenges [17][19] Future Outlook and M&A Strategy - The company has frozen M&A projects until further notice, with no immediate plans to resume [63] - Future M&A strategies will be discussed in light of the ongoing corporate reform and improvement plan [63][64] Third-Party Committee and Accountability - The Third-Party Committee is focused on identifying root causes of issues within the company, including governance and accounting practices [22][57] - All individuals, including former Chairman Mr. Nagamori, will be subject to assessment by the Third-Party Committee [41][51] Additional Important Points - Nidec's management acknowledges the need for a cultural shift towards long-term investment and ethical practices, moving away from a focus on short-term profit generation [24][67] - The company is committed to a transparent process in addressing past issues and implementing necessary reforms [19][24] - The upcoming reports from the Third-Party Committee will play a crucial role in shaping the future direction of the company [19][60] This summary encapsulates the key discussions and strategic directions outlined during the conference call, reflecting Nidec's commitment to reform and transparency in the wake of recent challenges.

Summary of Conference Call Notes on Japan Electronic Components/Semiconductors Industry Overview - The discussions focused on the semiconductor industry in Japan, particularly companies such as Murata, Renesas, and Nidec - Investor sentiment is increasingly cautious regarding production constraints for smartphones and PCs due to memory shortages - There is a growing interest in stocks with low exposure to smartphone sales, with potential for re-rating in 2026, such as Renesas and Nidec [1][2] Company-Specific Insights Murata Manufacturing (Buy, on CL) - Even with a potential year-over-year decline in smartphone/PC volumes (e.g., -5% to -10%), the MLCC supply/demand balance and earnings outlook are expected to remain stable due to increased sales of AI server products and the weak yen [2] - Murata has significant exposure to North American smartphones and is expected to benefit from higher content per device and market share recovery [2] - Price stabilization in MLCC is anticipated to drive earnings upside, more so than volume changes [2] - No signs of excess customer inventories suggest that a decline in demand will not lead to inventory corrections [2] - Any temporary negative earnings impact from smartphones/PCs is expected to be quickly priced into the stock, with share price weakness viewed as a buying opportunity [2] Renesas Electronics (Buy) - Interest in Renesas is growing amid uncertainty in smartphone-related stocks, with a small downside risk for its automotive business due to already low inventory levels [3][7] - The infrastructure business, particularly for data centers and AI servers, is expected to be a stronger growth driver than market expectations [7] - Investors are cautiously optimistic about the stock's valuation improving, despite concerns about management comments potentially dampening expectations [7] Nidec (Buy) - There are rising expectations for improvements in governance and interest in whether the share price has bottomed out [8] - Investor interest is increasing regarding the company's underlying earning power after normalization [8] - Discussions are ongoing about potential future risks and a normalization scenario for Nidec [8] Feedback on Other Companies - **Ibiden (Buy)**: Recent share price rally is seen as premature, but positive earnings improvement is expected from major CPU customers [10] - **TDK (Buy)**: Investors are adopting a wait-and-see approach due to production cuts for Chinese smartphones, but valuation is becoming more attractive [11] - **Nitto Denko (Buy)**: Concerns about falling demand for smartphones and PCs are prevalent, despite expectations for share buybacks and a new medium-term plan [12] - **Kyocera (Buy)**: Investor interest in the upcoming medium-term plan is noted, but no drastic changes in earnings or share price expectations are anticipated [14] - **MinebeaMitsumi (Buy)**: Earnings outlook is expected to align with forecasts, with a favorable risk-return profile noted [15] - **Rohm (Neutral)**: Positive sentiment exists due to management comments and expectations for market recovery, but restructuring discussions are not a major focus [16] - **Alps Alpine (Neutral)**: Discussions about potential buying opportunities are emerging, contingent on strong FY3/27 earnings guidance [17] General Investor Concerns - Investors are generally concerned about rising input costs, including higher prices for precious metals and materials, and companies' abilities to pass on these costs [18] Conclusion - The semiconductor industry in Japan is facing cautious investor sentiment due to production constraints and memory shortages, with a shift in focus towards companies with lower exposure to smartphone sales - Key companies like Murata, Renesas, and Nidec are viewed positively, with expectations for stable earnings and potential growth drivers in AI and infrastructure sectors - Broader concerns about input costs and market conditions are influencing investor strategies across the sector

Core Viewpoint - Moody's Ratings has downgraded the Japanese motor maker's credit rating to non-investment grade due to concerns regarding the reliability of its financial disclosures and governance risks [1] Company Summary - The Japanese motor maker's credit rating has been affected by uncertainty surrounding its financial disclosures [1] - Governance risks have been identified as a significant factor in the downgrade of the company's credit rating [1]

Nidec founder Shigenobu Nagamori is to step down from his position as chairman of the board following the discovery of a series of accounting issues dating back years https://t.co/Zu2BaNcCxy ...

Summary of Key Points from the Conference Call Industry Overview - The discussion focused on the energy storage systems (ESS), robotics, and solar anti-involution themes, with key companies mentioned including Sungrow, Canadian Solar, CATL, Tesla, Nidec, Orbbec, Shuanghuan, and Sanhua [1][2]. Core Insights 1. **Energy Storage Systems (ESS) Valuation Concerns** - Investors find the risk/reward for several ESS companies unattractive at current valuations due to policy risks and margin uncertainty [1][2]. - There is a strong demand outlook for 2026 driven by AI data centers and aging electricity grids, but concerns exist regarding the sustainability of the ESS theme post-2028 as alternative solutions may scale up [2]. 2. **Robotics Market Challenges** - There is skepticism regarding the near-term mass production of humanoid robotics, leading to a preference for companies with resilient core businesses rather than those heavily reliant on robotics [3]. - Investors are particularly interested in understanding the mass production timelines and application sequences of leading players in the robotics sector, including Tesla and various Chinese companies [3]. 3. **Solar Polysilicon Sector Dynamics** - Ongoing discussions about solar polysilicon supply consolidation highlight investor interest in anti-involution initiatives, but there is limited visibility on actual progress and price stabilization [5]. - The anti-involution campaign's rationale is being closely examined, with potential implications for other oversupplied sectors like solar cells and EVs [5]. Additional Important Insights - **Client Preferences** - Client interest is concentrated in companies perceived to have competitive advantages, such as Tesla, Sungrow, CATL, and Orbbec, rather than a broad positive sentiment across the sector [1]. - There is a notable shift in conviction towards US beneficiaries and alternative technologies to address energy shortages, with some investors opting to remain on the sidelines until clearer visibility on margins and policies emerges [2]. - **Geopolitical and Margin Risks** - Specific concerns were raised about Sungrow facing near-term headwinds due to gross margin erosion and geopolitical risks, which could impact its performance [2]. - **Market Sentiment** - The overall sentiment indicates a cautious approach among investors, with a preference for companies that can demonstrate visible growth in their core operations while treating robotics as a speculative investment [3]. This summary encapsulates the key points discussed during the conference call, providing insights into the current state and future outlook of the ESS, robotics, and solar sectors.

Core Points - Japan's exchange chief is urging Nidec to act swiftly to enhance internal controls due to recent accounting and reporting issues that jeopardize the company's listing status [1] Group 1 - The exchange chief's call for Nidec to improve internal controls highlights the urgency of addressing the company's financial governance [1] - Nidec faces potential delisting risks stemming from its current accounting and reporting troubles, indicating significant operational challenges [1]

Nidec shares fell for a seventh consecutive trading day as an ongoing accounting probe further chipped away at the company’s creditworthiness https://t.co/EcaalOuMm5 ...

Nidec became the world's top motor maker thanks to founder Shigenobu Nagamori's hard-driving culture. Now, that same relentless pressure has erupted into an accounting scandal that threatens to undo his legacy. https://t.co/GMRwUoaKag📷: Akio Kon/Bloomberg https://t.co/aLH2Bw9dsa ...