ROHM COMPANY LIMITED

Business Details

A reportable segment that manufactures and sells LSI products such as Analog IC, Logic IC, and Memory. It has a broad footprint across the automotive market (body systems for ADAS/xEV), consumer electronics market (amusement equipment), computer & storage market (motor driver ICs and power ICs for servers/SSDs), and industrial equipment market. In FY2026 (ending March 2026), external customer sales were ¥218,390 million, making it the largest segment within the group, and segment profit improved significantly from a loss in the prior period to ¥24,535 million.

Recent Overview

Turned profitable from a prior-period loss, with sales up 7.1% and segment profit of ¥24,535 million

In FY2026 (ending March 2026), sales were ¥218,390 million (up 7.1% year on year) and segment profit was ¥24,535 million (versus a segment loss of ¥767 million in the prior period), representing a significant improvement. While ADAS-related products in the automotive market entered an adjustment phase, high-value-added products for body and xEV applications grew. In the consumer electronics market, amusement-related demand remained solid, and in the computer & storage market, server-related demand showed a recovery trend. In addition, the change in depreciation method from the declining-balance method to the straight-line method increased LSI segment profit by ¥6,205 million.

Key Products

Growth Drivers

• Growth in high-value-added products for body and xEV applications in the automotive market
• Contribution to higher sales from expanding demand in the consumer electronics market (amusement equipment)
• Recovery in demand for motor driver ICs and power ICs for servers/SSDs in the computer & storage market
• Recovery trend in the industrial equipment market as inventory adjustments were resolved
• Materialization of fixed cost reduction effects from structural reforms implemented in the prior period
• Decrease in depreciation expense due to the change in depreciation method from the declining-balance method to the straight-line method (increased LSI segment profit by ¥6,205 million in the current period)

Risks

• Risk of continued adjustment phase for ADAS-related products in the automotive market
• Demand volatility risk in the xEV market (medium-term growth rate of the BEV market expected to fall below previous forecasts)
• Demand uncertainty stemming from US trade policy and geopolitical risks
• Risk of slowing pace of recovery in the industrial equipment market
• Impact on various markets from tightening memory supply-demand balance due to the spread of generative AI
• Risk of increased fixed cost burden due to lower utilization rates resulting from production adjustments

Business Details

Manufactures and sells transistors, diodes, SiC/Si Power Devices, Light Emitting Diodes (LED), and Semiconductor Lasers. Primary customers are in the automotive market (SiC Power Devices for xEV), industrial equipment market, and computer & storage market. Due to slowing growth in the BEV market, a large-scale impairment was recorded primarily on SiC fixed assets, but sales are on a recovery trend, up 9.7% year on year. This is a strategically core segment accounting for the majority of the group's overall capital expenditure, and structural reforms are underway.

Recent Overview

Recorded a large-scale impairment of ¥191,648 million on SiC fixed assets, while sales recovered, up 9.7% year on year

In FY2026 (ending March 2026), it became clear that the medium-term growth rate of the BEV market would fall below previous forecasts, leading to an impairment loss of ¥191,648 million (a significant increase from ¥17,605 million in the prior period) recorded primarily on fixed assets in the SiC business. As a result, segment assets decreased significantly from ¥377,428 million to ¥225,178 million. On the other hand, sales recovered to ¥205,263 million (up 9.7% year on year), and the segment loss improved to ¥22,704 million (versus a loss of ¥45,899 million in the prior period). The change in depreciation method from the declining-balance method to the straight-line method had the effect of reducing the segment loss by ¥7,833 million. Capital expenditure was also significantly reduced to ¥69,099 million (from ¥111,255 million in the prior period), reflecting a shift toward restraining increases in fixed costs.

Key Products

Growth Drivers

• Continued adoption of SiC Power Devices for xEV applications in the automotive market (sustained by the long-term trend of automotive electrification)
• Expanding demand for Semiconductor Lasers in the computer & storage market (increased data center investment driven by the spread of generative AI)
• Continuation of the recovery trend driven by progress in resolving supply chain inventory in the industrial equipment market
• Reduced fixed cost burden from the change in depreciation method to the straight-line method (an effect of improving segment loss by ¥7,833 million in the current period)
• Improved profitability and restrained increase in fixed costs by minimizing capital expenditure to necessary levels
• Potential future scale expansion through business integration discussions (at the basic agreement stage) with Toshiba Electronic Devices & Storage's semiconductor business and Mitsubishi Electric's power device business

Risks

• Risk of slowing growth in demand for SiC Power Devices due to the medium-term growth rate of the BEV market falling below previous forecasts
• Uncertainty over profitability recovery and remaining fixed cost burden even after the large-scale impairment (¥191,648 million) on SiC fixed assets
• Lower medium-term growth rate in the xEV market due to reduced US EV incentives and reconsideration of the EU's 2035 internal combustion engine regulations
• Intensifying competition with China-based semiconductor manufacturers (for the automotive and industrial equipment markets)
• Demand volatility and supply chain disruption risk due to US trade policy developments and geopolitical risks
• Risk of medium-term management plan revisions if business integration discussions with Toshiba Electronic Devices & Storage and Mitsubishi Electric reach a final agreement

Business Details

The Modules segment consists of two businesses: Print Heads and Optical Modules. Print Heads are used mainly in office equipment and payment terminals, while automotive LED modules are the main product in Optical Modules. Even as the overall group posted a net loss for two consecutive periods, this segment maintained profitability, with segment profit of ¥3,522 million in FY2026 (ending March 2026). Although its sales scale is small at approximately 6.6% of the group's overall total, it has a notable presence in terms of earnings stability.

Recent Overview

Sales down 3.0% year on year, but profit up 30.9% year on year on improved margin

In the Modules segment for FY2026 (ending March 2026), sales decreased to ¥31,589 million (down 3.0% year on year) due to the impact of lower sales of automotive LED modules. On the other hand, in addition to increased sales of Print Heads for office equipment, the change in depreciation method from the declining-balance method to the straight-line method (increasing segment profit by ¥290 million) contributed to a significant increase in segment profit, which rose to ¥3,522 million (up 30.9% year on year). The profit margin improved from 8.3% to 11.2%.

Key Products

Growth Drivers

• Earnings contribution from increased sales of Print Heads for office equipment
• Fixed cost reduction effect from the change in depreciation method from the declining-balance method to the straight-line method (increased segment profit by ¥290 million in the current period)
• Benefit from fixed cost reductions through group-wide structural reforms
• Offsetting of the decline in sales for office equipment by expanding demand for Print Heads used in payment terminals

Risks

• Sluggish demand for automotive LED modules (continuation of the adjustment phase in the automotive market)
• Structural decline in demand for Print Heads due to the long-term shrinking trend in the office equipment market
• Small segment asset scale (¥13,699 million), potentially resulting in lower investment priority within the group
• Continued sales decline forecast for FY2027 (ending March 2027), with sales projected at ¥29,700 million (down 5.9% year on year)
• Impairment loss of ¥1,291 million also arose in the Modules segment (a significant increase from ¥288 million in the prior period)

Business Details

The "Other" segment mainly consists of the resistor business. It supplies high-reliability products such as shunt resistors and high-power resistors to the automotive and industrial equipment markets, and also handles General-purpose Resistors for the consumer electronics market. This segment consolidates businesses not included in the three reportable segments of LSI, Semiconductor Devices, and Modules. Although small in scale, accounting for approximately 5.4% of the group's overall sales in FY2026 (ending March 2026), it functions as a stable earnings contributor.

Recent Overview

Both sales and profit increased year on year, driven by shunt resistors and other high-reliability products

For the full year FY2026 (ending March 2026), sales were ¥25,903 million (up 3.5% year on year) and segment profit was ¥4,104 million (up 62.6% year on year), representing a significant improvement. Shunt resistors and high-power high-reliability products for the automotive and industrial equipment markets performed well, while sales of General-purpose Resistors for the consumer electronics and automotive markets decreased. The change in depreciation method from the declining-balance method to the straight-line method increased segment profit by ¥554 million in the current period. Capital expenditure decreased year on year, continuing the stance of restraining fixed costs.

Key Products

Growth Drivers

• Continued solid demand for shunt resistors and high-power high-reliability products for the automotive and industrial equipment markets
• Recovery trend driven by progress in resolving supply chain inventory in the industrial equipment market
• Contribution to improved segment profit margin from fixed cost reductions through group-wide structural reforms
• Boost to segment profit from the change in depreciation method from the declining-balance method to the straight-line method (an increase of ¥554 million in the current period)

Risks

• Sluggish demand for General-purpose Resistors: sales of general-purpose products for the consumer electronics and automotive markets tend to decline during market downturns
• Small segment scale: accounting for only around 5% of group sales, limiting scale benefits
• Risk from fluctuations in automotive production volumes: stagnating xEV demand could also spill over into demand for high-reliability products
• Risk of delayed demand recovery in the industrial equipment market: renewed inventory adjustments could also affect demand for high-reliability products
• Demand uncertainty stemming from geopolitical risks such as US trade policy