ENVALITH
日本電波工業株式会社 logo

NIHON DEMPA KOGYO CO., LTD.

6779・Prime Market・Electric Appliances

Official website
日本電波工業株式会社 logo
NIHON DEMPA KOGYO CO., LTD.6779

Business

NIHON DEMPA KOGYO CO., LTD. (NDK) was founded in 1948 and is a specialist manufacturer that integrally produces and sells crystal-related products—Quartz Crystal Resonators, Quartz Crystal Oscillators, applied equipment, synthetic quartz, optical products, and others—from raw materials through to finished products. The company operates globally through a group of 15 companies, comprising 2 domestic subsidiaries and 10 overseas subsidiaries, with its primary customer base spanning five markets: automotive, mobile communications, industrial equipment, defense, and optics. Its products are supplied to automakers, telecommunications equipment manufacturers, and AI data centers across Europe, the Americas, Asia, and Japan. Net sales for FY2026 (ending March 2026) were ¥54,629 million. The company is listed on the Prime Market of the Tokyo Stock Exchange.

Business Model

The company operates a vertically integrated manufacturing system spanning from the production of raw materials (synthetic quartz) to the processing, assembly, and sale of Quartz Crystal Resonators and Quartz Crystal Oscillators. While outsourcing production to domestic and overseas manufacturing subsidiaries, it supplies products globally through sales subsidiaries in North America, Europe, China, Southeast Asia, and Taiwan. Revenue composition consists of Quartz Crystal Resonators at ¥39,513 million (72% of total), Quartz Crystal Oscillators at ¥9,094 million (17%), and Others at ¥6,021 million (11%).

Company Strengths

The company possesses an integrated manufacturing system that completes all processes in-house, from synthetic quartz production to the processing and assembly of Quartz Crystal Resonators and Quartz Crystal Oscillators. In the optical market, the securities report explicitly states that the world's highest level of purity in raw quartz crystal is the source of its competitive advantage, and the company holds a high share in the professional-use camera market. This vertically integrated system serves as the foundation for quality reliability and stable supply capability.

In FY2026 (ending March 2026), the company completed development of 2520 and 2016 size differential output oscillators compatible with 800Gbps/1.6Tbps optical transceivers, and world's smallest class OCXOs (supporting +85°C for AI data center applications), among others. For automotive applications, the company also completed development of the world's first 1612 size Quartz Crystal Resonator for next-generation automotive communication. R&D expenses amounted to ¥2,830 million, establishing a system for continuous market introduction of next-generation products.

The securities report explicitly states that the company "has a long-standing transaction history with global automotive clients and operates its business with quality reliability and stable supply capability as the foundation of its competitiveness." Automotive applications account for approximately half of net sales, with a track record of supplying major automakers in Europe, North America, and Japan. The company's capability to meet automotive quality standards is also demonstrated by the completed development of products compliant with AEC-Q100/Q200.

ENVALITH's Perspective

In FY2026 (ending March 2026), the company secured revenue growth to ¥54,629 million (up 2.9% year on year), but operating profit fell sharply to ¥3,355 million (down 27.4% year on year). R&D expenses increased by ¥745 million, from ¥2,085 million to ¥2,830 million, and depreciation expenses associated with DX investment also expanded. The gross profit margin declined from 30.3% in the previous period to 28.8%, illustrating a structure in which rising costs are eroding profit. The operating profit margin fell from 8.7% to 6.1%, continuing the divergence from the FY2023 (ended March 2023) peak level of around 15.9%.

The company's forecast for FY2027 (ending March 2027) calls for a significant recovery, with revenue of ¥60,600 million (up 10.9% year on year) and operating profit of ¥4,000 million (up 19.2% year on year). Increased sales of products for AI data centers are explicitly cited as the main driver of revenue growth, premised on external tailwinds from expanding AI investment. However, it should be noted that geopolitical risks such as high U.S. tariff policy and worsening conditions in the Middle East are not reflected in the earnings outlook. The first-half cumulative operating profit forecast of ¥1,400 million (down 2.2% year on year) reflects a cautious view for the first half.

Free cash flow for FY2026 (ending March 2026) was negative ¥3,178 million (a deterioration of ¥4,834 million year on year). While investment expanded, with expenditures of ¥5,701 million for tangible fixed asset acquisitions and ¥1,036 million for intangible asset acquisitions, operating cash flow remained at only ¥4,201 million. Cash and cash equivalents decreased by ¥5,076 million, from ¥15,881 million to ¥10,805 million. With non-current borrowings of ¥24,807 million on the balance sheet, it will be necessary to continue monitoring cash flow management and financial leverage trends should the investment phase continue.

Growth Strategy

Aiming to achieve Vision2030 centered on five markets—AI, defense, automotive, etc.—under the "Five Pillars + One" strategy

Expansion of sales of oscillators for optical transceivers and AI servers is positioned as the primary driver of revenue growth in FY2027 (ending March 2027). Sales to industrial equipment applications increased in FY2026 (ending March 2026), and demand capture is progressing. This initiative is essential to achieving the projected net sales of ¥60,600 million for FY2027 (ending March 2027).

Promoting DX investment, including renewal of core systems (change in inventory valuation method to the total average method), together with renewal of cutting-edge production lines. Expenditure on acquisition of property, plant and equipment in FY2026 (ending March 2026) increased substantially to ¥5,701 million from ¥3,664 million in the previous fiscal year. While this is temporarily depressing net income for the period, it represents an upfront investment phase aimed at achieving a dramatic future improvement in productivity.

Sales for special-purpose equipment, centered on defense applications, increased year on year in FY2026 (ending March 2026). Other items (including defense, optical, etc.) grew strongly to ¥6,021 million (up 11.3% year on year). Continued sales growth in defense and special-purpose equipment is also expected in the FY2027 (ending March 2027) forecast, making this one of the key pillars of the portfolio transformation strategy "Five Pillars + One."

Sales growth for automotive applications is expected against the backdrop of increasing sophistication of ADAS (Advanced Driver Assistance Systems). In FY2026 (ending March 2026), sales to Europe were sluggish, while sales to Japan increased, with safety stock securing driven by rising memory prices also contributing in the second half of the fiscal year. Continued sales growth in automotive applications is also planned in the FY2027 (ending March 2027) forecast.

Utilizing subsidies from national and local government bodies related to employee hiring and capital expenditure. In FY2026 (ending March 2026), government subsidies of ¥115 million were recognized as operating revenue, and deferred income from government subsidies of ¥1,032 million was recorded under non-current liabilities (a substantial increase from ¥8 million in the previous fiscal year). This contributes to reducing the financial burden during the upfront investment phase.

Last updated: July 19, 2026