Can volume growth in AI and advanced semiconductors continue to drive profit in the third quarter?

Revenue in the first half of FY2026 was ¥676.9 billion, up 5% year on year, while core operating profit was ¥88.8 billion, up 156.5%. Semiconductor and electronic materials were particularly strong, with revenue of ¥299.0 billion, up 30% year on year, and core operating profit of ¥81.5 billion, up 92%, accounting for approximately 92% of company-wide core operating profit. In assessing the company's earnings growth, the key issue is whether volume growth in semiconductor and electronic materials is continuing across multiple applications rather than representing a temporary rebound.

By product, semiconductor back-end materials were strongest, with revenue of ¥70.9 billion, up 38% year on year, driven by growing demand for advanced semiconductors, including AI applications. Semiconductor front-end materials generated ¥21.8 billion, up 8%, while device solutions generated ¥29.0 billion, down 1%, indicating that growth is concentrated in back-end materials. Semiconductor and electronic materials had already generated first-quarter revenue of ¥134.7 billion and core operating profit of ¥34.0 billion, so performance accelerated further with the addition of the second quarter. However, if weakness in device solutions persists into the third quarter, there will be limits to any reacceleration in the company's growth rate and profit margin.

By segment, core operating profit was ¥81.5 billion for semiconductor and electronic materials, ¥4.3 billion for mobility, ¥6.3 billion for innovation materials, a loss of ¥0.6 billion for chemicals, ¥3.8 billion for クラサスケミカル, and a loss of ¥6.5 billion for other businesses and adjustments. Accordingly, first-half company-wide profit growth is highly concentrated in semiconductor and electronic materials. If profit in that segment slows by even around 10%, the improvement in other segments would be unlikely to offset the impact.

In the next earnings release, we will examine back-end materials sales volume, the sales mix for AI applications, customer inventory levels, and the contribution from price revisions separately. The first-half materials explain the strength of demand for AI applications, but do not fully disclose the sales mix for AI or the breakdown of volume and unit prices by product. Whether third-quarter semiconductor and electronic materials revenue can maintain year-on-year growth of at least 20% and core operating profit can maintain growth of at least 50% will serve as a benchmark supporting expectations following the full-year upward revision.