Marumae Co., Ltd.

Business Details

Designs, manufactures, and processes high-precision aluminum metal components used in vacuum environments for semiconductor manufacturing equipment (front-end processes such as etching, CVD, cleaning, and coating) and FPD manufacturing equipment. Customers are semiconductor equipment manufacturers, and the business is driven by two pillars: stable order intake from consumables demand and orders for new equipment. High technical requirements such as plasma resistance, high-voltage compatibility, and high flatness serve as barriers to entry. In the nine months ended Q3 FY2026 (ending March 2026), both order value and sales reached record highs for a nine-month period.

Recent Overview

Semiconductor field hits record high; OLED-related sales recover sharply, driving 8.7% year-on-year sales growth

Sales for the nine months ended Q3 FY2026 (ending August 2026) were ¥6,353 million (up 8.7% year on year), and segment profit was ¥1,430 million (up 1.6% year on year). High utilization rates at semiconductor fabs and a sharp expansion in capital investment for DRAM and advanced logic manufacturing equipment drove order value and sales to record highs for a nine-month period. In the FPD field, OLED-related sales recovered sharply. On the cost side, labor costs increased due to higher material purchase volumes, increased headcount, and higher compensation levels, while the change in depreciation method from the declining-balance method to the straight-line method (applied from the first quarter) reduced depreciation expense compared with the prior period, contributing a positive impact of ¥108 million to segment profit for the nine-month period. Provisions for losses on contracts and similar items also decreased.

Key Products

Growth Drivers

• Rapid expansion of capital investment in semiconductor manufacturing equipment for advanced logic foundries and DRAM (DRAM-related investment has accelerated sharply since 2026, with NAND-related investment plans also beginning to emerge)
• Stable and expanding orders for consumables (ESC, electrodes, etc.) driven by continued high utilization rates at semiconductor fabs
• Sharp recovery in FPD-related sales due to increased capital investment in FPD (G6, G8 OLED) equipment for China
• Production facility investment toward the ¥12 billion sales target for the Precision Parts segment under the medium-term business plan "Fusion2028" (¥2,000 million of proceeds from the public offering and third-party allotment capital increase to be allocated to capital investment in the Precision Parts Business by August 2028)
• Expansion of orders for high-value-added consumables through development of new materials and technologies, such as low-temperature-compatible materials and high-insulation coatings for cryogenic etching
• Continued favorable outlook for demand for semiconductor manufacturing equipment in the Chinese market

Risks

• Risk of significant demand fluctuations due to cyclical swings in the semiconductor manufacturing equipment market (the inventory adjustment phase since 2023 being a typical example)
• Risk of sales fluctuations due to changes in the capital investment cycle in the FPD field (sales already down 21.6% year on year)
• Risk of declining order prices due to intensifying price competition with small and medium-sized competitors
• Risk of increased costs due to dependence on highly skilled personnel and rising headcount and compensation levels (increased labor costs are pressuring profit margins)
• Risk of rising raw material procurement costs associated with increased material purchase volumes
• Note that the change in depreciation method for tangible fixed assets (from declining-balance to straight-line), which boosted profit by ¥108 million in the nine months ended Q3, is a temporary factor, and care should be taken regarding the gap with underlying performance

Business Details

A newly established segment following the consolidation of KM Aluminum Co., Ltd. (KMAC) as a subsidiary in April 2025. The segment covers three fields: ultra-high-purity aluminum materials (for sputtering targets), cast vacuum chambers for semiconductor etching equipment, and high-purity aluminum basic materials for electrolytic capacitors and HDDs. Major customers include semiconductor equipment manufacturers such as NHK Spring Co., Ltd. and Tokyo Electron Miyagi Limited. The medium-term target is an operating margin of 18%.

Recent Overview

Orders expanded sharply following completion of customer inventory adjustment, driving 437.6% sales growth to ¥7,668 million

Customer inventory adjustments in the semiconductor equipment components field concluded in February 2026, after which orders expanded rapidly. In IT Equipment, demand for memory-related applications has been strong, and consumable materials for the CVD process have also been solid. In Basic Materials, shipments of materials for electrolytic capacitors and HDDs have expanded. Sales for the nine months ended Q3 of the current fiscal year were ¥7,668 million (up 437.6% year on year), and segment profit was ¥1,231 million (up 808.1% year on year). Additionally, following finalization of the provisional accounting treatment related to the business combination, ¥2,551 million was newly recognized as "customer relationship assets," resulting in ¥291 million of amortization expense related to goodwill and other items for the cumulative period. The estimated amortization expense for goodwill and other items for the next fiscal year is ¥388 million.

Key Products

Growth Drivers

• Increased demand for aluminum target materials driven by the rapid expansion of capital investment for advanced logic foundries and HBM DRAM
• Increased demand for semiconductor equipment components as DRAM-related investment has accelerated sharply since the start of 2026, with NAND-related investment plans also beginning to emerge
• Continued strength in semiconductor and FPD-related capital investment for the Chinese market
• Completion of customer inventory adjustments in the semiconductor equipment components field (February 2026) and response to the sharp increase in orders
• Continued strength in the Basic Materials field driven by increased demand for HDDs
• Construction of new plants and renovation of existing plants for expanded sales of target materials under the medium-term business plan "Fusion2028" (approximately ¥5.8 billion in combined funding raised for the Precision Parts and Functional Materials businesses)

Risks

• Risk of impairment related to the goodwill balance of ¥2,846 million and customer relationship assets of ¥2,322 million (combined total ¥5,168 million) (goodwill amortized over 16 years, customer relationship assets over 13 years, with combined amortization expense of ¥388 million expected next fiscal year)
• Risk of significant demand fluctuations due to cyclical swings in the semiconductor equipment market
• Risk of impact on demand from China due to geopolitical risks such as U.S. export restrictions on China
• Price competition and low-margin structure in the Basic Materials field due to competition with domestic and overseas competitors
• Risk of breaching financial covenants attached to KMAC's working capital commitment line and term loans
• Risk of delays in securing personnel and building production capacity to respond to the sharp increase in orders
• Risk of continued stagnation in demand for legacy logic applications in the IT Equipment field