DISCO CORPORATION
6146・Prime Market・Machinery
Business
DISCO Corporation, founded in 1937, is a manufacturer of Precision Processing Equipment and Precision Processing Tools, with its core business built on "Kiru, Kezuru, Migaku" (cutting, grinding, polishing) technology. Its main products are Precision Processing Equipment such as dicing saws, grinders, and polishers, and consumables (Precision Processing Tools) such as dicing blades. Its primary customers are semiconductor and electronic component manufacturers, and it supplies products to major foundries and IDMs in Taiwan, South Korea, China, the United States, and Europe, led by TSMC (net sales of ¥48,240 million in the current period, accounting for 11.0% of total sales). Centered on domestic manufacturing sites (Hiroshima, Nagano, Tokyo), the company operates globally through sales and service subsidiaries in seven countries worldwide.
Business Model
In addition to sales of equipment (Precision Processing Equipment), the company adopts a total solution model combining four elements: ongoing supply of consumables (Precision Processing Tools), provision of application technology through free test cuts, and after-sales service following installation. Because consumables are repeatedly purchased in line with customers' equipment utilization rates, the structure generates stable revenue even after equipment sales. In addition, the processing know-how accumulated through more than 60 years of test cuts and specialized engineers form a barrier to entry, maintaining high customer loyalty.
Company Strengths
The vast verification data and know-how accumulated through test cuts (free-of-charge processing verification) continuing since the 1960s, along with the specialist engineers who can fully utilize them, deter competitor entry. Building equivalent application technology requires investment of time on the scale of several decades, forming a structural advantage that is difficult for emerging companies to replicate.
In FY2026 (ending March 2026), the operating margin reached 42.3% and the ordinary profit margin also reached 42.3%. The 4-year cumulative ordinary profit margin was 41.4%, achieving the company's own target of "4-year cumulative ordinary profit margin of 20% or more" for 10 consecutive terms. The 4-year cumulative RORA (Return On Risk Assets) was 51.2%, and the equity ratio stood at 78.9%, indicating an extremely robust financial foundation.
Under the "Fab Important Strategy," which positions the company's own manufacturing sites as strategic assets, the company maintains in-house production of key components and a co-located development and manufacturing structure. This enables rapid response to specification changes, flexible support for high-mix, low-volume production, and supply chain resilience. Total capital expenditure for the current period was ¥32,708 million, including ¥10,312 million in down payments for construction of the Gohara Plant and ¥3,632 million in down payments for construction of the Haneda R&D Center, reflecting continued active investment.
ENVALITH's Perspective
Performance Trend
In FY2026 (ending March 2026), the company achieved increased revenue and profit, with net sales of ¥436,889 million (up 11.1% year on year), operating profit of ¥184,989 million (up 10.9%), and profit attributable to owners of parent of ¥135,521 million (up 9.4%), marking a record high in both shipment value and net sales for the 6th consecutive period. While continued investment in data centers driven by expanding demand for generative AI was the primary driver in the market environment, a slight decline in the gross profit margin (gross profit margin: 70.6% in the previous period → 70.1% in the current period) due to changes in the product and application mix, along with increases in personnel expenses and R&D expenses, constrained profit growth to a level roughly in line with revenue growth. Net sales over the past 5 periods have followed an expanding trend, moving from ¥253,781 million → ¥284,135 million → ¥307,554 million → ¥393,313 million → ¥436,889 million.
Growth Strategy
Deepening of Kiru, Kezuru, Migaku technologies and expansion of production capacity through the Fab Important strategy
Strengthening the development and shipment of high-value-added products in response to demand for high-performance semiconductors for advanced logic and HBM applications. In FY2026 (ending March 2026), revenue contribution from high-value-added products was the primary driver of increased revenue and profit, with sales to Taiwan expanding sharply to ¥117,378 million.
Continuing active capital investment in manufacturing land, buildings, and other facilities. Construction in progress doubled from ¥16,946 million in the previous fiscal year to ¥33,885 million in the current fiscal year, with investment underway to expand future production capacity. Funds have also been secured for future business expansion, including a ¥100,000 million time deposit.
Achieved one of the Company's key targets, a "4-year cumulative ordinary income margin of 20% or higher," for 10 consecutive periods. As of the current fiscal year, the 4-year cumulative ordinary income margin stood at 41.4% (39.0% in the previous fiscal year), maintaining a level well above the target and confirming the sustained maintenance of a high-profitability business structure.
In light of the difficulty in forecasting demand in the semiconductor and electronic components industry, the Company will continue its policy of disclosing earnings forecasts only one quarter ahead. For the first quarter of FY2027 (ending March 2027), the Company forecasts net sales of ¥106,100 million (up 18.0% year on year) and operating income of ¥42,000 million (up 21.8% year on year). The assumed exchange rate is 1 US dollar = ¥157.
Last updated: July 19, 2026