MegaChips Corporation
6875・Prime Market・Electric Appliances
Business
MegaChips Corporation, founded in 1990, is a fabless LSI manufacturer that provides an integrated solution spanning system LSI design and development through to supply, based on its proprietary analog and digital technologies. In its core Amusement business, the company holds an exclusive supply position for LSIs (custom memory) used to store game software for Nintendo, while its ASIC business develops customer-specific LSIs for industrial equipment and communications infrastructure. Manufacturing is primarily outsourced under a fabless model to major overseas foundries (such as Macronix). The group, comprising 8 subsidiaries and 1 affiliate, operates as a single segment and serves a broad customer base of electronics manufacturers both in Japan and overseas.
Business Model
Through a fabless model without manufacturing facilities, the company concentrates its management resources on research and development. It plans and develops customer-specific LSI (ASIC), which combines customer application knowledge with LSI design expertise, as well as its own brand LSI (ASSP), outsourcing manufacturing to overseas foundries before selling to customers. For Nintendo, the company functions as the exclusive sales agent for Macronix products, maintaining a structure that secures stable revenue.
Company Strengths
Based on the tripartite manufacturing consignment agreement concluded in 2001, the company maintains a contract to exclusively supply the full volume of mask ROM, flash memory, and other products for Nintendo. Sales to Nintendo in FY2026 (ending March 2026) totaled ¥27,865 million, accounting for 77.0% of total net sales, with this long-term continuing contract forming the foundation of stable earnings.
As of the end of March 2026, the company held 478 registered patents, 106 pending applications, and 21 trademarks, managing a total of 606 industrial property rights. Patents are internationally distributed with 257 in Japan, 169 in North America, 33 in Asia, and 19 in the EU, legally protecting proprietary technologies in high-speed interfaces, security, memory control, and other areas.
As of the end of FY2026 (ending March 2026), the company maintained zero outstanding borrowings, shareholders' equity of ¥184,767 million, and a capital adequacy ratio of 72.4%. The fabless business model eliminates the need for long-term capital tied up in production facilities, securing a high current ratio of 279.5% and quick ratio of 242.8%. Gains from the sale of SiTime Corporation shares and other sources have also secured funds for growth investment and shareholder returns.
ENVALITH's Perspective
Performance Trend
Revenue peaked at ¥75,256 million in FY2022 (ended March 2022) and has declined for five consecutive periods, falling to less than half that level at ¥36,169 million in FY2026 (ending March 2026), down 14.5% year on year. Operating profit also deteriorated from ¥7,030 million in FY2022 to an operating loss of ¥174 million in FY2026, pushing the core business into the red. The main external factor was a global demand slowdown and prolonged inventory adjustment in the OA equipment and industrial equipment fields, which could not be offset by resilient demand in the amusement field. On the other hand, a rise in the share price of SiTime Corporation (investment securities increased ¥112,718 million year on year to ¥214,354 million) and the recognition of a ¥15,150 million gain on partial sale led to a sharp increase on a reported basis, with comprehensive income of ¥83,906 million (up 266.3% year on year) and net income of ¥9,284 million (up 72.8% year on year). For FY2027 (ending March 2027), the company forecasts a recovery to revenue of ¥42,000 million and operating profit of ¥2,500 million, but the forecast net income of ¥27,000 million is driven primarily by an anticipated ¥37,000 million gain from the additional planned sale of 400,000 shares of SiTime Corporation.
Growth Strategy
Maintaining a stable Amusement business foundation while advancing the shift toward new ASIC and ASSP domains and leveraging proceeds from the sale of SiTime shares for growth investment
Maintain and expand our position as a key supplier by enhancing supply capability for differentiated products centered on memory technology and security technology, together with strengthening customer-focused support systems. Secure stable earnings even during transitional periods for new hardware migration, underpinning the earnings base of the business overall.
Promote a shift in growth targets away from dependence on OA equipment and industrial equipment toward the telecommunications infrastructure and imaging equipment fields. Leveraging strengths in optical access communication technology, focus on market development and business acquisition in North America and Asia, aiming for increased sales and profit over the medium to long term. In FY2026 (ending March 2026), recovery remains slow due to prolonged inventory adjustments, with demand recovery expected in FY2027 (ending March 2027).
Against the backdrop of progress in AI, IoT, and 5G, promote development of long-range, low-power-consumption wireless communication LSIs. Aim to accelerate commercialization through additional investment in Morse Micro (Australia, with investment securities of ¥14,842 million recorded), and to create new businesses through investment and M&A in startup companies as well as joint research and development with universities.
Under a plan to reduce the shareholding ratio in SiTime to approximately 5% by fiscal 2030, allocate proceeds from the sale to growth investment and shareholder returns. A gain on sale of ¥15,150 million was already recorded in FY2026 (ending March 2026). As a subsequent event, an additional sale of 400,000 shares was decided in May 2026, with a gain on sale of ¥37,000 million expected to be recorded in FY2027 (ending March 2027). The policy is to also carry out share buybacks totaling approximately ¥20.0 billion over the medium to long term.
The dividend for FY2026 (ending March 2026) is ¥250 per share (an increase of ¥110 from ¥140 in the previous period), with a payout ratio of 43.2%. For FY2027 (ending March 2027), a dividend of ¥260 per share (an increase of ¥10) is forecast. The policy is to carry out share buybacks totaling approximately ¥20.0 billion over the medium to long term, and share buybacks of ¥14,700 million were carried out in FY2026 (ending March 2026).
Last updated: July 19, 2026