1. Hitachi’s (6501 JT) Three (Four?) Pillars of Growth
Hitachi has developed a symbiosis between its main AI product, Lumada, and its Energy and Mobile divisions, which is generating a positive feedback loop between the three. Furthermore, the Energy business is in hyperdrive, because not only is it being revolutionized by AI, but demand for its energy grid services is also booming because of AI. Analyst Pelham Smithers reviews the outlook and updates his earnings model.
2. IT Service Sector Earnings: Sales Outperforming but Costs Limiting Margin Growth
Following the most recent earnings season, the IT Service sector showed stronger sales growth than margin improvement, highlighting strong underlying demand but also margin constraints due to ongoing investments to retain competitiveness in the AI era. While there is increasing evidence that companies are benefiting from adopting AI internally and offering new AI solutions, the positive impact is still in its early stages and therefore limited by investments for growth and efforts to reorganize company workflows.
Analyst Lindsay Whipp examines the extent to which the 18 companies discussed in this report performed in terms of their 1) sales growth vs consensus estimates and 2) cost and OPM performance vs consensus estimates.
3. CXMT Initiation – DRAM Maker on the Charge
CXMT focuses primarily on DDR5 and LPDDR5X products, rather than High-Bandwidth Memory [HBM]. It is positioning itself as a direct competitor to the triopoly – SK Hynix, Samsung Electronics, Micron– in commodity DRAM. This initiation report reviews the firm’s developments since the IPO, we look at the capacity roadmap, and we project earnings out to FY28.
Industry Insights
Video games round-up
Global semiconductor shipments over US$150bil in July
Implications of China’s potential anti-dumping duties on Japan’s semiconductor materials firms
Impact of stronger Yen on automakers’ earnings
Macro / Market / Misc.
Japan GDP and wage data revised up
Machine tool orders +65% YoY in Aug
Japan PPI +7.6% YoY in August, July’s figure massively revised up
Company Insights / News
Kioxia boss claims to be holding back sales teams’ price hike requests
NEC narrowing QC development to focus on quantum annealing tech
NEC’s decision may reflect QC tipping point has been reached
Kepler Computing emerges offering HBM alternative using FeRAM
Mitsui Chemicals: Meeting feedback / Global top products
JXAM doubling its ultra-fine nickel production for MLCCs
Readacross from our 1:1 meeting with JXAM and TSMC’s August sales on Rasa
SMC rises in weak market
Nidec presents its product quality investigation report
Nabtesco promising ship device presentation
Nintendo holds underwhelming Zelda “Direct” and Direct Part 2
Capcom readthrough from Onimusha launch
Apple unveils foldable iPhone Duo
EQT raises tender offer price for Kakaku.com for the fourth time
Company Insights / News / Previews & Results
Anycolor: FY27 Q1 beats, FY27 guidance unchanged
Timee: FY27 Q1 slightly misses but no change to full-year guidance
Visional beats FY26 consensus, own guidance for OP, but forecasts weak FY27 OP growth on further investments
The Weekly Comment by Pelham Smithers
Anyone looking for evidence of demand side decline for semiconductors will be disappointed by the latest data from TSMC. Pelham Smithers tells us why.
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics, Gaming
1. Video Games Round-Up Part 1
2. Video Games Round-up Part 2
3. Capcom Readthrough from Onimusha Launch
4. Nintendo: Zelda “Direct” / Direct Part 2 Disappoints
5. Apple Unveils Foldable iPhone Duo
Technology: Industrial Electronics / Components / Semis & SPE / Precision
6. Global Semiconductor Shipments +132% YoY in July
7. Kepler Computing Emerges Offering HBM Alternative Using FeRAM
8. NEC Narrowing Quantum Computer Development to Focus on Quantum Annealing Tech – NAR Report
9. NEC’s Decision May Reflect Quantum Computing Tipping Point Has Been Reached
10. Nidec Presents its Product Quality Investigation Report
11. Kioxia CEO Claims to Be Holding Back Sales’ Price Hike Requests
Chemicals / Materials
12. Implications of China’s Potential Anti-Dumping Duties for Semiconductor Materials Companies
13. Mitsui Chemicals: Meeting Feedback / Top Global Products
14. JXAM Doubling its Ultra-Fine Nickel Production for MLCCs
15. Readacross from our 1:1 Meeting with JXAM and TSMC’s August Sales on Rasa
Autos / New Mobility
16. Impact of Stronger Yen on Automakers’ Earnings
Capital Goods / Machinery
17. Machine Tool Orders +65% YoY in Aug
18. Nabtesco Promising Ship Device Presentation
19. SMC Rises in Weak Market
Internet / eCommerce
20. Anycolor: FY27 Q1 Beats, Full-Year Guidance Unchanged
21. Timee: FY27 Q1 Slightly Misses but No Change to Full-Year Guidance
22. EQT Raises Tender Offer Price for Kakaku.com for the Fourth Time
Enterprise Software / IT Services
23. Visional FY26 OP Beats, but FY27 CE OP Weak on Growth Investments
Miscellaneous / Market / Strategy / Macro
24. Japan GDP and Wage Data Revised Up
25. Japan PPI +7.6% YoY in August, July’s Figure Massively Revised Up
PSA in the Press
Japan’s Timee Shares Plunge After Quarterly Earnings Disappoint – Bloomberg [11 Sep]
Excerpt: Earnings missed market expectations as demand in retail industry-related and logistics segment slowed down due to cool summer weather, said Pelham Smithers analyst Thao Nguyen in a report. FY 2027 forecast for Timee’s operating profit of ¥9.8 billion is still achievable despite the disappointing earnings, given the company’s dominance of the domestic on-demand job market supported by a recovering food segment, wrote Nguyen
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