EBRAINS,INC.

Business Details

Specializes in the design, manufacture, and sale of industrial computers (backplanes, bus racks, system chassis, etc.) incorporated into social and industrial infrastructure. Operates across five application fields: telecommunications/broadcasting, electronic applications (medical/HPC), measurement and control (semiconductor manufacturing equipment/FA), transportation-related, and defense/other. Customers are mainly major electronics and machinery equipment manufacturers. Domestic sales account for over 90% of total sales, and the Chinese subsidiary is utilized as a procurement and manufacturing base for materials.

Recent Overview

Net sales declined slightly, but operating profit rose 14% on progress in price pass-through, driven by defense and electric power fields

In FY2026 (ending March 2026), net sales came in at ¥3,993 million (down 0.8% year on year), a slight decline. The mainstay measurement and control field (57.3% of sales composition) decreased by ¥169 million due to delays in capital investment for semiconductor manufacturing equipment, and the electronic applications field also decreased by ¥50 million due to customer inventory adjustments. On the other hand, the defense/other field expanded to ¥343 million (up ¥116 million, or 51.2%) due to new contract wins, and the telecommunications/broadcasting field expanded to ¥277 million (up ¥48 million, or 21.1%) due to new electric power-related projects. On the profit side, gross margin improved due to progress in passing through the cost of purchased materials to sales prices, achieving operating profit of ¥530 million (up 14.2% year on year) and ordinary profit of ¥550 million (up 15.8% year on year). Cash and cash equivalents decreased due to the transfer of ¥1,000 million in surplus funds to callable deposits (long-term deposits), but financial soundness was maintained.

Key Products

Growth Drivers

• Recovery in demand for semiconductor manufacturing equipment in the measurement and control field (expansion of investment in HBM and advanced logic semiconductors for AI servers; SEAJ forecasts a 12% increase in market size for fiscal 2026)
• Sales expansion through new contract wins in the defense-related field (¥343 million in FY2026 (ending March 2026), up 51.2% year on year, with continued tailwinds from increases in Japan's defense budget)
• Expansion of new electric power-related projects in the telecommunications/broadcasting field (strengthening of power supply networks in response to increasing AI server demand)
• Continued improvement in gross margin through progress in passing through the cost of purchased materials to sales prices
• Expansion of the scope of contracted work and promotion of higher value-added offerings through the unit supply expansion strategy
• Plan for substantial sales growth in the measurement and control field toward FY2027 (ending March 2027) (¥2,880 million, up 25.8% year on year)

Risks

• Risk of recurrence of delays in capital investment and inventory adjustments for semiconductor manufacturing equipment in the mainstay measurement and control field (57.3% of sales composition)
• Risk of prolonged customer inventory adjustments in the electronic applications field (medical-related) (expected to continue in FY2026 (ending March 2026) as well, with a decrease also expected due to model changeovers in China-manufactured products)
• Decline in sales in the transportation-related field due to the winding down of production for completed installation projects (FY2027 (ending March 2027) plan: down 21.0% year on year)
• Downward pressure on sales due to reduced capital investment related to telecommunications/broadcasting (FY2027 (ending March 2027) plan: down 9.8% year on year)
• Uncertainty in the global economy due to changes in U.S. tariff policy, the slowdown in the Chinese economy, and geopolitical risks (Ukraine, the Middle East)
• Risk of recurrence of surging crude oil and energy prices and difficulty in procuring components associated with concerns over the closure of the Strait of Hormuz
• Foreign exchange risk (impact through transactions with the Chinese subsidiary and overseas material procurement; foreign exchange loss of ¥7 million recorded in the current period)
• Liquidity management risk associated with the early termination clause of callable deposits (¥1,000 million in long-term deposits)