IBIDEN CO.,LTD.

Business Details

The Electronics Business is a reportable segment engaged in the manufacture and sale of package substrates, with High-Performance IC Package Substrates for AI servers, general-purpose servers, and personal computers as its core products. The company has built a global production system across multiple domestic and overseas sites (including the Philippines). Demand related to generative AI is the primary driver, and cost-reduction activities at the Philippine plant are also contributing to improved profitability. The company plans capital expenditures totaling approximately ¥500,000 million over the three-year period from FY2026 to FY2028, aiming to expand orders in growth markets.

Recent Overview

Net sales up 23.4% and operating income up 68.5%, driven by strong AI-related demand

In the Electronics Business for FY2026 (ending March 2026), orders for generative AI servers remained generally strong, and demand for High-Performance IC Package Substrates for general-purpose servers also showed a gradual recovery trend. Combined with the effects of cost-reduction activities at the Philippine plant, net sales rose significantly to ¥243,316 million (up 23.4% year on year) and operating income rose to ¥45,248 million (up 68.5% year on year). On the other hand, demand for personal computers fell below expectations, and the company recorded an impairment loss of ¥10,630 million due to the deteriorating competitive environment for PC-related products at Ibiden Philippines, Inc. Depreciation of idle fixed assets also increased to ¥3,870 million from the prior period.

Key Products

Growth Drivers

• Continued strong demand for High-Performance IC Package Substrates for generative AI servers
• Gradual recovery in demand for High-Performance IC Package Substrates for general-purpose servers
• Ongoing effects of cost-reduction activities at the Philippine plant
• Production capacity expansion through capital expenditures of approximately ¥500,000 million in the Electronics Business over the three-year period from FY2026 to FY2028
• Strengthening of on-site capabilities through global quality enhancement and skilled-personnel development based on the One Factory concept
• Overall demand growth for High-Performance IC Package Substrates in response to increased processing power and power-saving needs accompanying further growth in the AI field

Risks

• Continued weak demand for PCs and further deterioration of the competitive environment (conservative revision of Ibiden Philippines, Inc.'s business plan)
• Risk of revenue concentration on specific customers (Intel, NVIDIA, AMD, etc.)
• Increase in depreciation and amortization (¥55,202 million in FY2026 (ending March 2026)) and expansion of depreciation of idle fixed assets (¥3,870 million) accompanying large-scale capital expenditures
• Risk of continued recognition of impairment losses on fixed assets of Ibiden Philippines, Inc. (¥10,630 million in FY2026 (ending March 2026))
• Risk of order fluctuations due to customers' production and inventory adjustments
• Geopolitical risks, including changes in U.S. tariff policy, and changes in the competitive environment among semiconductor manufacturers

Business Details

This segment manufactures and sells environment-related ceramic products (DPF, AFP), special carbon products (FGM), fine ceramics products, and ceramic fibers. Major customers include automobile manufacturers and semiconductor manufacturing equipment makers. In addition to Japan, the segment operates globally with manufacturing sites in the United States, Mexico, Hungary, Italy, South Korea, China, and other countries. From FY2026 (ending March 2026), Safety Components for EV Batteries (NEV) were transferred to this segment from the Technology Development Division.

Recent Overview

All of DPF, AFP, and FGM saw lower sales and profit year on year; operating income fell 37.4% to ¥7,646 million

In the Ceramics Business for FY2026 (ending March 2026), net sales were ¥82,554 million (down 1.8% year on year) and operating income was ¥7,646 million (down 37.4% year on year), a significant deterioration in profitability. DPF saw manufacturing costs worsen due to lower production volume amid declining orders; AFP saw sales volume decline amid slowing demand; and FGM continued to see sluggish demand for power semiconductors due to the EV market slowdown as well as ongoing customer inventory adjustments. NEV saw sales increase with the start of mass production, but continued to record an operating loss due to an increased fixed cost burden. The company also recorded an impairment loss of ¥2,024 million related to idle assets.

Key Products

Growth Drivers

• Capturing demand for DPF and AFP from industrial vehicles (trucks, construction machinery) in emerging markets, particularly China and India
• Continued demand for internal combustion engine products (benefiting from a slower shift to EVs due to changes in U.S. tariff policy)
• Expansion of mass production of NEV (Safety Components for EV Batteries) and increased orders for peripheral components for electric vehicles
• Business expansion in the FGM business through planned investment in new markets such as the energy (nuclear power) field
• Cost management through the establishment of a flexible, order-linked production system for DPF and AFP

Risks

• Slowing growth in global automobile production volumes (impact of changes in U.S. tariff policy and stagnation of the Chinese economy)
• Further decline in DPF and AFP sales volume due to prolonged stagnation of the Chinese economy
• Continued increase in NEV fixed cost burden and prolonged operating losses due to an EV market slowdown exceeding expectations
• Prolonged customer inventory adjustments in FGM and continued sluggish demand for power semiconductors
• Risk of deteriorating manufacturing costs (under-absorption of fixed costs) due to declining production volume
• Possibility of additional impairment losses related to idle assets

Business Details

The "Other" segment of the IBIDEN Group encompasses a wide range of businesses, including facility design and construction (Construction Division), housing equipment and melamine decorative laminates (Building Materials Division), slope stabilization and landscaping work (Green Tech), synthetic resin processing, agricultural, livestock, and marine product processing, information services, petroleum product sales, and the Healthcare Business. Under the medium-term management plan, this segment is positioned as the "third pillar of profit" following Electronics and Ceramics, and the company is promoting the expansion of core businesses along with selection and concentration.

Recent Overview

Driven by construction, Green Tech, and Healthcare, both net sales and operating income increased

In FY2026 (ending March 2026), net sales in Other Businesses were ¥90,330 million (up 2.5% year on year) and operating income was ¥8,964 million (up 3.0% year on year). The Construction Division contributed through steady orders for power generation and wastewater treatment facilities and smooth progress on large-scale projects. The Green Tech Division benefited from smooth progress on large-scale project construction. The Healthcare Business contributed through a large-scale order secured toward the end of the fiscal year. On the other hand, the Building Materials Division saw a decrease in the number of units sold due to delayed housing starts resulting from the revised Building Standards Act, leading to a decline in net sales year on year.

Key Products

Growth Drivers

• Steady orders for power generation and wastewater treatment facilities and smooth progress on large-scale construction projects in the Construction Division
• Continued acquisition of orders for large-scale project construction in the slope stabilization and landscaping businesses (Green Tech)
• Acquisition of large-scale orders and business expansion in the Healthcare Business
• Expansion of core businesses and promotion of selection and concentration based on the medium-term management plan "MNS115Plan"
• Synergy with the stable electric power business, leveraging the unique competitiveness of domestic group companies

Risks

• Delayed housing starts due to the revised Building Standards Act continuing to pressure the number of units sold in the Building Materials Division
• Risk of long-term decline in demand for building materials due to a structural downward trend in housing starts in the housing market
• Deteriorating profit margins in landscaping and slope construction work due to rising material prices
• Dispersion of management resources due to the diversified business structure, and costs of responding to changes in the competitive environment for each business
• Risk of declining demand for construction and capital investment due to uncertainty about the economic outlook stemming from changes in U.S. tariff policy