Citing data from Japanese bathroom-products giant TOTO, Bloomberg on June 2 estimated the group’s operating profit for this fiscal year will rise 32% to 27 billion yen, with profits from its semiconductor-related division already contributing more than 50%. TOTO Chief Technology Officer Ryosuke Hayashi confirmed that in the previous fiscal year, semiconductor-related capital expenditures accounted for only 11% of total capital expenditures, and in the future this share will exceed half. Over the past year, TOTO’s stock price has doubled.
Verified financial figures: Operating profit of 27 billion yen and the capital-expenditure share flipping
Based on the figures officially released by TOTO:
Estimated operating profit for this fiscal year: 27 billion yen, up 32% year on year, a record high
Semiconductor segment profit contribution share: more than 50% of the group total
Semiconductor-related capital expenditure share in the prior fiscal year: 11%
Hayashi’s confirmed target share: semiconductor-related capital expenditures will exceed 50% of total capital expenditures
FY2028 investment plan: invest about 30 billion yen in semiconductor ceramic capacity and R&D
In a Bloomberg interview, Hayashi explained that with the U.S. and China expansion plans having run their course, the capital-expenditure mix for the residential fixtures business and new semiconductor ventures will “flip.”
Electrostatic chuck business: TOTO’s global positioning and technical moat
The function of an electrostatic chuck is to precisely fix a silicon wafer on a processing platform during the chip-manufacturing process. Even a slight deviation in thermal conductivity can cause wafer warping and directly reduce chip yields. TOTO is the world’s second-largest electrostatic chuck manufacturer. Such chucks are especially critical for producing NAND flash memory, where NAND is the core memory chip for AI data-center storage of model weights and inference data.
TOTO’s material accumulation comes from the toilet-ceramic glaze technology developed in the 1980s; its stain-resistance, corrosion-resistance, and anti-particle characteristics were extended to semiconductor manufacturing processes, and it developed “aerosol deposition thin film” technology. TOTO’s semiconductor business had stalled for years, but after partial automation in 2020, its profitability and cycle resilience improved significantly. An analyst at SBI Securities noted that TOTO’s advanced ceramics division has a gross margin exceeding 40%, far higher than its bathroom-products main business.
Hayashi also said in the Bloomberg interview that as chiplet architecture becomes more widely adopted, “resin and metal are no longer enough,” creating new structural demand for high-performance engineering ceramics.
Palliser Capital letter to TOTO on February 2026: the main confirmed points
UK activist investment firm Palliser Capital sent a letter to TOTO’s board of directors in February 2026, confirming the main points as follows:
· Describes TOTO as “the most undervalued and ignored AI memory beneficiary stock”
· Advanced ceramics division gross margin exceeds 40%, far higher than the bathroom-products business, and profit contribution has already surpassed the core business
· Calls on TOTO to increase semiconductor investment and proactively explain this business’s value to the market
TOTO declined to assess Palliser’s letter, but in a Bloomberg interview, Hayashi said the company will build a production environment “that can properly respond to demand,” and that the focus of capital expenditures will indeed shift to semiconductors.
FAQ
What role does TOTO’s electrostatic chuck play in chip manufacturing?
Electrostatic chucks are used in the chip-manufacturing process to precisely fix silicon wafers to the processing platform, with extremely high precision requirements. Even a tiny deviation in thermal conductivity can cause wafer deformation and lower yields. TOTO’s technical moat comes from its engineering-ceramics materials capabilities accumulated since the 1980s, as well as its “aerosol deposition thin film” technology—capabilities that other materials companies cannot quickly replicate.
How does the growing adoption of chiplet architecture strengthen demand for TOTO’s semiconductor business?
Chiplet architecture is a design approach that packages multiple small chips with different functions into a single housing, and it is becoming the mainstream architecture for high-performance AI chips. In the Bloomberg interview, Hayashi said that with increased chiplet usage, “resin and metal are no longer enough,” leading to new structural demand for high-performance engineering ceramics.
What specific directions does TOTO’s semiconductor investment plan through 2028 include?
According to TOTO’s official description, the company plans to invest about 30 billion yen in semiconductor ceramic capacity and R&D through fiscal year 2028. Hayashi confirmed that the focus of capital expenditures will shift to semiconductors, but details of specific capacity-expansion projects have not yet been fully disclosed.
