SHOWA SHINKU CO., LTD.

Business Details

The company manufactures and sells equipment centered on vacuum deposition and sputtering systems, spanning three categories: Crystal Device Equipment, Optical Equipment, and Electronic Component Equipment & Other Equipment. Main customers include crystal device manufacturers, optical device manufacturers, and electronic component manufacturers both in Japan and overseas. The company differentiates itself by offering custom-made, high-precision equipment, and is also focusing on expanding sales to new customers, including those in the aerospace sector.

Recent Overview

Sales and profit rose significantly as delivery of the prior period's order backlog progressed, but new orders declined sharply, halving the order backlog

In FY2026 (ending March 2026), delivery of the large order backlog carried over from the prior period (Crystal Device Equipment and Optical Equipment) proceeded smoothly, resulting in significant increases in both sales and profit: net sales of ¥7,046 million (up 22.6% year on year) and segment profit of ¥1,661 million (up 66.9% year on year). On the other hand, new orders received plunged to ¥3,906 million (down 50.9% year on year). In particular, orders received for Optical Equipment collapsed to ¥269 million (down 90.3% year on year), shrinking the period-end order backlog to ¥3,088 million (down 50.4% from the prior period-end). Sales forecasts for FY2027 (ending March 2027) are ¥2,946 million (Crystal Device), ¥1,534 million (Optical), and ¥1,862 million (Electronic Components), indicating an expected decline in sales across the equipment business as a whole.

Key Products

Growth Drivers

• Expectations for a recovery in orders for Crystal Device Equipment driven by growing demand for crystal devices used in data center servers amid expanding generative AI demand (FY2027 (ending March 2027) forecast orders received of ¥2,640 million)
• Securing new orders in Electronic Component Equipment from new customers including those in the aerospace sector (FY2026 (ending March 2026) orders received of ¥2,215 million, up 40.5% year on year) and expansion toward FY2027 (ending March 2027) forecast orders received of ¥3,900 million
• Significant recovery expected in Optical Equipment orders received to a FY2027 (ending March 2027) forecast of ¥2,260 million (from actual ¥269 million in FY2026 (ending March 2026))
• Medium- to long-term expansion in demand for high-performance electronic components driven by next-generation communication standards (5G), AI, vehicle electrification, autonomous driving, and expansion of the XR market
• New customer development and increased inquiries through proactive engagement in joint development and sample production requests with customers

Risks

• The order backlog for Optical Equipment has shrunk sharply to ¥147 million, making the acquisition of large new orders essential to achieving the FY2027 (ending March 2027) sales forecast of ¥1,534 million
• Risk of prolonged inventory adjustment in the industrial equipment market and continued restraint in capital investment by device manufacturers
• Risk that the recovery in final product demand for smartphones remains gradual, keeping equipment utilization rate recovery at a limited level
• The timing of a full-fledged recovery in capital investment for general-purpose applications remains difficult to forecast
• Risk of a downturn in the global economy due to prolonged uncertainty in US trade policy and geopolitical risk
• Risk of declining demand from China due to a slowdown in Chinese economic growth (China's share of exports: 31.8%)
• Risk of performance timing mismatches due to the risk that order timing for some projects is pushed back to the following period