inspec Inc.

Business Details

Develops, manufactures, sells, and maintains visual inspection equipment for semiconductor package substrates used in CPUs and GPUs for data centers, driven by the spread of generative AI, as well as for precision printed circuit boards used in smartphones and other digital devices. Major customers include TOPPAN Inc. and Murata Manufacturing Co., Ltd. Following withdrawal from the exposure equipment-related business, the company has concentrated its management resources on this business. It also expands into the Asian market through its Taiwanese subsidiary (Taiwan Yingshi Co., Ltd.). This is the company's only segment, and segment-by-segment disclosure has therefore been omitted.

Recent Overview

Net sales reached a record high, but operating income fell short of plan due to worsening cost ratios, and operating cash flow turned negative

In FY2026 (ending April 2026), net sales reached a record high of ¥2,478 million (up 10.8% year on year). On the other hand, gross profit margin declined 5.8 percentage points year on year due to increased development costs for new cutting-edge package substrate inspection equipment for AI-enabled data centers, and operating income of ¥108 million fell short of the initial plan. Ordinary income decreased 32.7% year on year to ¥78 million, due in part to a significant decline in subsidy income (from ¥59 million in the prior period to ¥2 million in the current period). Net income turned to a profit of ¥76 million as the ¥247 million business withdrawal loss recorded in the prior period did not recur. Orders received totaled ¥2,331 million (down 22.7% year on year), and the period-end order backlog stood at ¥1,273 million (down 10.4% year on year). Operating cash flow deteriorated sharply to △¥519 million, from +¥544 million in the prior period, due to increases in inventory (△¥414 million) and trade receivables (△¥331 million), and the company increased short-term borrowings by ¥720 million to secure funding. For FY2027 (ending April 2027), the company forecasts net sales of ¥2,500 million, operating income of ¥150 million, ordinary income of ¥100 million, and net income of ¥80 million.

Key Products

Growth Drivers

• Continued inquiries for semiconductor package substrate inspection equipment amid expanding demand for GPUs and CPUs for data centers driven by the spread of generative AI (investment for AI-enabled data centers remains robust)
• Growing demand for high-performance inspection equipment amid increasingly active investment in chiplet technology and advanced packaging (including interposers)
• The new fiscal year begins with a combined total of ¥1,446 million, comprising the order backlog of ¥1,273 million at the start of FY2027 (ending April 2027) plus new orders of ¥172 million received in May and June 2026
• Concentration of management resources on the Substrate Inspection Equipment Business following the completion of withdrawal from the exposure equipment-related business
• Strengthening of sales activities in overseas markets, primarily Taiwan and Southeast Asia (Thailand and Vietnam), and development of new customers through exhibition participation
• Further strengthening of technology development and sales activities driven by the launch of the medium-term management plan (FY2026 (ending April 2026) to FY2028 (ending April 2028))

Risks

• Risk of cost overruns due to increased new development elements for cutting-edge package substrate inspection equipment for AI-enabled data centers (the company experienced a 5.8 percentage point decline in gross profit margin during the current period)
• Seasonal risk whereby first-half results tend to fall into deficit due to a revenue recognition structure in which order delivery and acceptance timing is concentrated in the second half
• Risk of inventory valuation losses if production based on anticipated orders (with work in process of ¥616 million and raw materials of ¥222 million accumulating) does not result in expected orders as planned
• Rising financial leverage and liquidity risk, as short-term borrowings expanded to ¥1,721 million (up ¥721 million from the prior period-end) and the equity ratio declined to 22.1% (from 24.9% at the prior period-end)
• Risk that the structure of relying on borrowings for working capital will continue, as operating cash flow was significantly negative at △¥519 million
• Risk of fluctuations in semiconductor investment plans due to the impact of US trade policy, stagnation of the Chinese economy, and heightened tensions in the Middle East
• Risk of revenue concentration in major customers (TOPPAN Inc. and Murata Manufacturing Co., Ltd.)
• Risk of delayed shareholder returns due to two consecutive fiscal years without dividends (the timing of dividend resumption remains undetermined as the company prioritizes strengthening its financial base)