OXIDE Corporation

Business Details

The Group operates in the Optical Business as a single segment. It develops, manufactures, and sells single crystals, optical components (optical devices), laser light sources, and optical measuring instruments, with major customers including semiconductor wafer inspection equipment manufacturers, PET inspection equipment manufacturers, and optical product manufacturers. The business is organized into three categories: "Semiconductor Business," "Healthcare Business," and "New Domain Business." In the first quarter of FY2027 (ending March 2027) (March to May 2026), the Semiconductor Business significantly exceeded forecasts amid a favorable market environment, and both sales and operating profit turned positive, exceeding the same period of the prior year.

Recent Overview

Q1 FY2027 (ending March 2027) saw a 22.6% increase in net sales and a return to operating profit, marking a significant improvement

In the first quarter of FY2027 (ending March 2027) (March to May 2026), net sales were ¥2,192 million (up 22.6% year on year), and operating profit was ¥199 million, turning positive from an operating loss of ¥72 million in the same period of the prior year. An increase in the sales mix of higher-margin products contributed to this improvement. While the Semiconductor Business significantly exceeded forecasts amid a favorable market, the Healthcare Business experienced shipment delays and the New Domain Business experienced delayed material arrivals, both resulting in deferrals to the second quarter. There is no change to the full-year earnings forecast (net sales of ¥9,828 million, operating profit of ¥933 million). Selling, general and administrative expenses were significantly reduced from ¥873 million in the same period of the prior year to ¥612 million, improving the profit structure.

Key Products

Growth Drivers

• Semiconductor Business: Expansion of the advanced semiconductor inspection equipment market driven by the spread of generative AI, alongside increased demand for existing Deep-UV Laser / Single Crystal products and the launch of new products
• Semiconductor Business: Expansion of recurring maintenance revenue as cumulative shipment volumes increase
• Healthcare Business: Expected expansion in demand for dedicated head PET scanners driven by regulatory approval of Alzheimer's dementia treatment drugs and insurance coverage for PET diagnostics
• New Domain Business: Increased shipments of Faraday rotators driven by global expansion in data center demand (the material arrival delay is temporary, with sales expected to be recorded from the second quarter onward)
• Improved profit structure through significant reduction in selling, general and administrative expenses (from ¥873 million in the same period of the prior year to ¥612 million in the current period)
• Improved financial position and reduced geopolitical risk following deconsolidation of Raicol, with continued sales growth on a standalone basis

Risks

• Changes in the procurement environment and rising prices of key raw materials (such as lutetium oxide) in the Healthcare Business: discussions with customers on trading terms are ongoing, and the impact on earnings remains unclear
• New Domain Business: risk of delayed arrival of materials for data center products (a deferral occurred in the first quarter, with dependence on sales recognition from the second quarter onward)
• Risk of continued shipment deferrals in the Healthcare Business: if concentration into the second quarter and beyond continues following the first quarter, this could affect achievement of the full-year forecast
• Due to the deconsolidation of Raicol, New Domain Business net sales for FY2027 (ending March 2027) are expected to decline 48.2% year on year to ¥1,575 million, with consolidated net sales expected to be limited to ¥9,828 million, down 2.1% year on year
• Procurement of lutetium oxide used in Scintillator Single Crystal manufacturing is dependent on China, presenting geopolitical risk and supply chain disruption risk
• Only a small number of companies domestically and internationally are capable of manufacturing key components for the Semiconductor Business, presenting ongoing procurement risk
• Retained earnings stood at △¥2,519 million (end of Q1, FY2027 ending March 2027), with accumulated losses remaining, and improving the financial structure remains an ongoing challenge
• The equity ratio stands at 32.9%, with interest-bearing debt (short-term borrowings of ¥2,900 million, long-term borrowings of ¥4,102 million, and corporate bonds of ¥150 million) at elevated levels, presenting continued financial leverage risk
• R&D expenses as a percentage of net sales stand at a high 10.6% (FY2027 ending March 2027 forecast), requiring a balance between improving profitability and investing in growth