Will the recovery in AI and semiconductor demand continue through FY2027-H1?

Revenue in FY2027-Q1 was ¥11,536 million, up 59.9% year on year, while operating profit was ¥590 million, up 612.5%. Net income attributable to owners of the parent was ¥363 million, up 673.4%. The operating margin was approximately 5.1%, calculated as operating profit of ¥590 million divided by revenue of ¥11,536 million, exceeding the 4.3% recorded for FY2026 as a whole. A key feature of Q1 was not merely a recovery in revenue, but the substantial flow-through of higher revenue into profit.

The company explained that capital investment in AI semiconductors for data centers, which are needed for generative AI, drove the market, while the completion of customer inventory adjustments expanded orders in the distribution business. By contrast, the FY2026 market outlook stated that mass-production investment in automotive and industrial semiconductors unrelated to AI had been postponed amid changes in EV policies and tariff risks, leaving demand soft. Accordingly, in H1 it will be necessary to assess the sustainability of orders and revenue separately for AI and data-center applications and for other end uses, rather than treating the recovery in overall semiconductor demand as a single trend.

Against FY2026 revenue of ¥32,614 million, the FY2027 revenue forecast of ¥50,900 million assumes a 56.1% year-on-year increase. The operating profit forecast also calls for an 82.5% increase, from ¥1,402 million in FY2026 to ¥2,560 million. Q1 progress against the full-year forecast was approximately 22.7% for revenue and 23.0% for operating profit. As these figures have not yet reached a simple 50% benchmark for the first half, one reference point will be whether Q2 can add approximately ¥13,914 million in revenue and ¥690 million in operating profit. However, quarterly seasonality has not been disclosed, so this is a mechanical benchmark rather than the company’s own plan.

The disclosures available to date do not provide the amount of AI-related orders as a share of revenue or total orders, the AI-related percentage for major customers, or the amount of incremental revenue attributable to the completion of inventory adjustments. In the H1 results, we want to assess as quantitatively as possible the orders by end use, changes in the order backlog, and first-half revenue from the distribution business, in order to determine whether Q1’s substantial revenue growth was driven by higher volumes for AI semiconductors or represented a temporary rebound resulting from the normalization of customer inventories.