Core Viewpoint - Japanese electronic component manufacturers are restructuring their production bases in response to geopolitical risks and the ongoing US-China trade tensions, with a focus on diversifying their supply chains outside of China [2][4][6]. Group 1: Company Actions - Tamura Corporation plans to reduce its production bases in China by approximately 30% by March 2028, shifting production to regions with lower geopolitical risks such as Europe and Mexico [2][4]. - TDK has initiated mass production of lithium-ion batteries in India, marking its first production outside of China [2][5]. - Murata Manufacturing is set to establish its first production base in India by the fiscal year 2026, focusing on multilayer ceramic capacitors (MLCC) [5][6]. Group 2: Market Trends - Japanese electronic component manufacturers are increasingly moving production to Southeast Asia and India to mitigate the impact of high tariffs on components produced in China [6][8]. - The global supply volume of Japanese electronic components is expected to increase, with a projected supply amount of 45.323 trillion yen for the fiscal year 2024, marking a 3% increase from the previous year [8]. - Despite the shift, the supply to China remains the highest, with an output value of 1.5802 trillion yen, indicating that China is still a significant market for Japanese manufacturers [8]. Group 3: Strategic Responses - Companies are responding to the normalization of risks associated with US-China relations by establishing independent supply chains for different regions [6][8]. - MEIKO has built a new factory in Vietnam with an investment of approximately 50 billion yen, aiming to produce printed circuit boards for iPhones, reducing its production ratio in China from 70% in 2018 to less than 5% by 2024 [7][8].

Core Viewpoint - Murata Manufacturing anticipates a peak in performance around 2030, driven by the widespread adoption of AI-equipped devices, despite a projected decline in profits for the current fiscal year [3][10][12]. Group 1: Investment and Growth Strategy - The company plans to increase its capital investment for the fiscal year ending March 2026 to 270 billion yen, a 50% increase from the previous year, in anticipation of growing demand for electronic components due to AI [3][6]. - A new factory is under construction in Izumo City, Shimane Prefecture, with an investment of approximately 47 billion yen, set to become Murata's largest facility upon completion in 2026 [5][6]. - The company aims to expand its market share of multilayer ceramic capacitors (MLCC) to 43% by 2030, up from the current 40% [15]. Group 2: Market Position and Challenges - Murata holds the largest market share in the MLCC segment, which is essential for smartphones and electric vehicles, with about 40% of a global market valued at approximately 2 trillion yen [6][7]. - Despite its leading position, the company faces challenges due to stagnation in the smartphone and automotive markets, with a projected net profit of 177 billion yen for the fiscal year 2025, a 24% decrease from the previous year [9][10]. - The competitive landscape is intensifying, with companies from Taiwan and South Korea aggressively pursuing market share, prompting Murata to invest heavily to maintain its leadership [16]. Group 3: Historical Performance and Future Outlook - Historically, Murata has experienced performance peaks every 15 years, with significant profit margins during the fiscal years of 1984, 2000, and 2015, linked to technological advancements in electronics [11][12]. - The upcoming peak in 2030 is expected to be driven by the integration of AI in consumer electronics, with the company preparing for a surge in demand for electronic components [12][15]. - The company acknowledges the need for substantial investment to stay ahead of competitors and capture market share, even if it means sacrificing short-term profits [16].

Core Viewpoint - The financial performance of eight major Japanese electronic component manufacturers has deteriorated in the April to June 2025 period, with a slight decrease in sales and a significant drop in net profits due to yen appreciation and slowing EV sales growth [2][4][5]. Group 1: Financial Performance Overview - The combined sales of the eight companies for April to June 2025 amounted to 2.8747 trillion yen, showing a slight decrease compared to the previous year [4][6]. - Net profit for the same period decreased by 24%, falling to 183.9 billion yen, marking the first profit decline in two years [4][6]. - Seven out of the eight companies reported a deterioration in their final profits, with only Kyocera showing positive results [2][4]. Group 2: Individual Company Performance - Murata Manufacturing's net profit decreased by 25% to 49.7 billion yen, attributed to weak sales growth of high-priced smartphones in China [7]. - TDK's net profit fell by 30% to 41.4 billion yen, impacted by yen appreciation and reduced demand for automotive MLCCs [5][6]. - MinebeaMitsumi's net profit decreased by 17% to 10.8 billion yen, but the company raised its annual performance forecast due to lower-than-expected impacts from U.S. tariffs [4][6]. - Sun Yuden reported a loss of 876 million yen, a significant decline from a profit of 6.3 billion yen in the same period last year [4][6]. Group 3: Market Trends and Challenges - The smartphone component market is facing intense price competition, particularly from Chinese manufacturers, as the proportion of mid-to-low-priced smartphones increases [7]. - There is uncertainty regarding demand trends and ongoing tariff negotiations, leading some companies to maintain their annual forecasts despite the challenging environment [8]. - The demand for components related to data centers is increasing due to the rise of generative AI, presenting potential growth opportunities for the industry [8].

Core Viewpoint - Murata Manufacturing reported a 25% year-on-year decrease in net profit for the April to June period, marking the first profit decline in two years, primarily due to intensified competition from Chinese component manufacturers in the mid-to-low price smartphone segment and the appreciation of the yen [1][2]. Financial Performance - For the April to June period, net profit fell to 49.7 billion yen, while operating revenue decreased by 1% to 416.1 billion yen, and operating profit dropped by 7% to 61.6 billion yen [1]. - The average exchange rate for the fiscal year was approximately 144 yen per dollar, which contributed to a 12.7 billion yen decline in operating profit due to an 11 yen appreciation of the yen compared to the previous year [1]. Market Outlook - The company anticipates a 6% year-on-year decrease in revenue for the current fiscal year, projecting total revenue of 1.64 trillion yen and a 24% drop in net profit to 177 billion yen [2]. - The president of Murata stated that while there is no strong growth in the market for electronic components, the factors leading to decline are also not significant [2]. Segment Analysis - Revenue from the "communication" sector, which includes smartphones, decreased by 11% to 137.6 billion yen, attributed to the rising proportion of mid-to-low price smartphones and competition from Chinese manufacturers [3]. - The "mobile mobility" sector, accounting for 27% of total revenue, saw a 1% decline to 113.3 billion yen, impacted by reduced sales of Japanese and European automobiles due to tariffs, despite increased demand for positioning sensors from Chinese automakers [3]. Supply Chain Dynamics - The global supply of smartphones is expected to remain at 1.17 billion units, with AI servers projected to account for 17% of overall server shipments, an increase of 4.5 percentage points from the previous year [4]. - The potential negative impact on Murata's performance due to a slowdown in global economic growth and reduced smartphone and automobile sales is being closely monitored [4].

Core Viewpoint - The investment plans of 30 Japanese electronic component companies indicate a significant increase in capital expenditure, particularly in the AI sector, despite slow recovery in smartphone and automotive components [1][3][4]. Group 1: Investment Trends - It is expected that 21 out of 30 companies will increase their investment in 2025, with a total amount projected to rise by 50% compared to 2020, reaching 1.3477 trillion yen [1][3]. - The actual equipment investment for these companies in 2024 is estimated at 1.1786 trillion yen, a decrease of 5% from 2023, falling short of the initial plan of 1.3 trillion yen [3]. - Major manufacturers are anticipated to significantly increase their investments, contributing to the overall growth in investment amounts [3]. Group 2: Sector-Specific Investments - Murata Manufacturing plans to allocate 270 billion yen for equipment investment in the fiscal year 2025, a 50% increase year-on-year, focusing on AI data centers and long-term growth despite short-term declines [3][4]. - Nidec's equipment investment for fiscal year 2025 is set at 140 billion yen, a 16% increase, primarily for AI data center cooling equipment and generators [4]. - Kyocera is investing 180 billion yen in fiscal year 2025, a 27% increase, to build new facilities for advanced semiconductor packaging and manufacturing equipment related to AI [4]. Group 3: Market Demand and Challenges - The demand for capacitors used in servers is projected to quadruple by 2029, with Japanese companies like Murata having a competitive advantage in this area [4]. - The recovery in components for smartphones and personal computers is slow, compounded by the adverse effects of the U.S. tariff policies [4][5]. - TDK anticipates a 24% increase in equipment investment for fiscal year 2025, reaching 280 billion yen, with a focus on high-performance batteries for AI smartphones [5][6].

Core Viewpoint - The semiconductor industry is expected to continue experiencing a disparity in demand, with AI-related products leading the market while broader product demand may not recover until the second half of 2025 [1][6]. Group 1: Semiconductor Market Trends - The semiconductor market size for Q1 2023 was $167.6 billion, showing a year-on-year growth of 19%, driven by high-demand chips for generative AI [5]. - TSMC's sales increased by 42% in Q1 2023, with high-performance computing (HPC) semiconductors making up 59% of total sales, up from 46% year-on-year [6]. - Demand for mature products, such as those used in smartphones and PCs, remains weak, with Samsung's semiconductor division only growing by 9% in Q1 2023, a significant slowdown from the previous quarter [7]. Group 2: NAND Flash Market Dynamics - Kioxia Holdings has begun to reduce NAND supply due to decreased demand, but expects NAND market conditions to improve starting in the second half of 2025 [9]. - Global NAND prices fell by 13% to 18% in Q1 2025 but are projected to rise by 3% to 8% in Q2 2025, indicating a potential recovery in demand [9]. - Smartphone manufacturers may increase demand for memory chips if the pace of price declines slows, aided by government subsidies in China to boost smartphone purchases [9]. Group 3: Automotive and Industrial Demand - Demand for automotive and industrial semiconductors is not expected to recover until after 2026, with companies like Renesas Electronics adjusting production timelines due to slowing EV growth [10][11]. - The average net profit for major automotive and industrial companies in Japan, the US, and Europe is projected to decrease by about 10% in 2025, but is expected to rebound by 31% in 2026 [12]. Group 4: Semiconductor Equipment and Supply Chain - Semiconductor manufacturing equipment sales in Japan grew by 18.2% year-on-year, driven by ongoing demand for AI-related semiconductors [16]. - However, investment in China has begun to slow, with companies previously rushing to invest in the Chinese market now seeing a decline in sales [16]. - The demand for electronic components, particularly those for AI data centers, remains strong, with companies like Murata Manufacturing expecting robust demand for multi-layer ceramic capacitors [17]. Group 5: Future Outlook - The expansion of AI applications is anticipated to drive demand for high-performance semiconductors in smartphones, PCs, and automotive sectors [18]. - Companies are focusing on improving quality and production efficiency to mitigate risks associated with potential declines in demand due to tariffs and other uncontrollable factors [18].