MegaChips Corporation

Business Details

A fabless manufacturer providing total solutions from LSI design and development to production, based on proprietary analog and digital technologies. Comprised of three core pillars: the mainstay ASIC (Customer-Specific LSI) business, the ASSP (Application-Specific Standard Product LSI) business, and the Amusement business. Manufacturing is primarily outsourced to major overseas foundries, and the company's strengths lie in communication interface technology, security technology, and image processing technology. While inventory adjustment in the OA equipment and industrial equipment fields continues to be prolonged, demand in the Amusement field remains firm.

Recent Overview

Core business posted an operating loss, but net profit rose sharply and total assets expanded significantly on gains from SiTime share sales

In FY2026 (ending March 2026), due to prolonged inventory adjustment in the OA equipment and industrial equipment fields, net sales fell to ¥36,169 million (down 14.5% year on year), and the company posted an operating loss of ¥174 million. On the other hand, it recorded a gain of ¥15,150 million on the sale of investment securities from the partial sale of SiTime Corporation shares, resulting in profit attributable to owners of parent of ¥9,284 million (up 72.8% year on year). Due to the rise in SiTime's share price, investment securities increased by ¥112,718 million, causing total assets to expand sharply to ¥255,158 million. The company carried out share buybacks of ¥14,700 million and dividend payments of ¥2,386 million. As a subsequent event, it decided on an additional sale of 400,000 SiTime shares in FY2027 (ending March 2027), expected to generate a gain of ¥37,000 million. The earnings forecast for FY2027 (ending March 2027) calls for net sales of ¥42,000 million (up 16.1% year on year), operating profit of ¥2,500 million, and net profit of ¥27,000 million.

Key Products

Growth Drivers

• Expanding semiconductor demand in the industrial equipment and communication infrastructure fields driven by advances in generative AI, IoT, and 5G
• Advancing the commercialization of long-range, low-power wireless communication LSIs through the capital alliance with Morse Micro Corporation
• Shifting to new growth targets in the communication and imaging equipment fields within the ASIC business and strengthening its business foundation
• Securing funds for growth investment and shareholder returns through the planned sale of SiTime Corporation shares (reducing shareholding ratio to approximately 5% by fiscal 2030)
• Expanding market share in the Amusement business through customer-focused proposal activities and differentiation centered on memory and security technology
• Optimizing the business portfolio toward medium- to long-term targets (net sales scale of ¥80 billion, operating profit of ¥10 billion, operating margin of 10% or higher, ROE of 8% or higher)
• Creating new businesses through business investment and M&A in startup companies and joint research and development with universities

Risks

• Prolonged inventory adjustment in the ASIC business for OA equipment and industrial equipment, and delayed recovery in market demand
• The significant impact of fluctuations in the market value of SiTime Corporation shares on total assets, net assets, and deferred tax liabilities (investment securities account for 84% of total assets)
• Risk of revenue concentration on key customers (dependence on customers in the Amusement field)
• Impact on business performance from severe fluctuations in exchange rates, including yen depreciation and appreciation
• Uncertainty in the global economy due to geopolitical risks (supply chain disruptions, raw material price fluctuations, trade friction with the U.S. and Europe)
• Risk of dependence on overseas foundries for manufacturing associated with the fabless model, and supply chain volatility
• Risk of impairment of excess earning power and potential recognition of valuation losses in investments in unlisted startups such as Morse Micro Corporation
• A net profit structure dependent on gains from the sale of investment securities (core business operating profit/loss has turned negative)