Sanken Electric Co., Ltd.

Business Details

The Sanken Electric Group operates in a single segment covering the manufacture and sale of semiconductor devices. Its core products are Power Modules (IPM, etc.) and Power Devices, supplied to the automotive, white goods, industrial machinery, and consumer markets. Production is carried out at domestic and overseas manufacturing subsidiaries (Ishikawa Sanken, Yamagata Sanken, Dalian Sanken Electric, PT. Sanken Indonesia, etc.), with sales conducted through a global network of sales subsidiaries covering Japan, Asia, and the West. In FY2026 (ending March 2026), the overseas sales ratio was 55.5% for Asia and 3.4% for the West, totaling approximately 59% (excluding the "Others" category).

Recent Overview

Net sales fell 34% due to Allegro's deconsolidation and declining white goods share in China, with the operating loss widening

In FY2026 (ending March 2026), net sales were ¥80,175 million (down 34.1% year on year). The main cause was the deconsolidation of Allegro MicroSystems following its transition to equity-method accounting (the "Others" category declined 95%). At Sanken Core, the shift to Chinese local semiconductors progressed in the white goods market, causing a significant decline in sales from the second quarter onward. Continued increases in metal reference prices also contributed, and the operating loss widened to ¥4,728 million. On the other hand, the ordinary loss improved to ¥8,839 million from ¥14,276 million in the prior period, due to a reduction in foreign exchange losses, among other factors. As a subsequent event, Yamagata Sanken resolved to solicit approximately 65 voluntary early retirements (an extraordinary loss of approximately ¥700 million is expected to be recorded in FY2027, ending March 2027). For FY2027 (ending March 2027), the company forecasts net sales of ¥86,500 million and a return to profitability with operating income of ¥1,400 million (assumed exchange rate of ¥155 to the dollar).

Key Products

Growth Drivers

• Expanding sales of power modules for automotive air conditioning and continuing to capture demand for internal combustion engine vehicles, including hybrid vehicles
• Expanding product sales targeting growing demand in the industrial machinery sector, including commercial air conditioning and AI data centers
• Maximizing investment efficiency and strengthening competitiveness through IPM back-end process production collaboration and joint product development with MinebeaMitsumi's power devices business
• Entering the GaN power device market and enhancing technological competitiveness through the acquisition of Powdec
• Expanding orders across Asia and maintaining/expanding the white goods business through the newly established Asia Strategy Office (January 2026)
• Securing mid-to-long-term mass production projects in the automotive and industrial machinery sectors through the newly established Mobility Strategy Office
• Expanding share among customers in Korea and expanding sales to new customers, including in the Indian market
• Improving productivity through fixed cost reductions and completion of back-end process production reorganization at Ishikawa Sanken, and reducing variable costs through material specification changes from gold to copper

Risks

• Loss of share in the white goods market due to the rise of local Chinese semiconductor manufacturers (significant decline in sales from the second quarter onward)
• Decline in demand for battery EV-related products due to the EV chasm (slowdown in BEV demand caused by policy reviews in various countries)
• Rising procurement costs due to soaring material prices (metal reference prices) and the continued weakening of the yen
• Impact on demand and the supply chain from geopolitical risks such as China's economic slowdown and U.S. tariff measures
• Continued recording of equity-method investment losses due to deteriorating performance at Allegro MicroSystems (equity-method affiliate) (¥2,125 million in FY2026, ending March 2026)
• Recording of extraordinary losses (approximately ¥700 million) and incurrence of structural reform costs associated with the voluntary early retirement program at Yamagata Sanken
• Financial pressure from two consecutive years of negative operating cash flow and a sharp increase in short-term borrowings (up ¥18,272 million year on year)
• Uncertainty regarding the recovery in profitability needed to achieve the targets of the FY2024 Mid-term Management Plan (Sanken Core net sales of ¥100 billion or more and operating margin of 10%)