Japanese sanitary equipment maker TOTO (Toto) announced that it will allocate over half of its total capital expenditure to chip-related businesses in the coming years, in response to explosive demand for its engineering ceramic products from AI chip manufacturing equipment makers. According to Bloomberg, the company’s Chief Technology Officer Ryosuke Hayashi said in an interview that it will focus on building a production system to „effectively respond to demand“ and noted that the rise of Chiplet, a next-generation chip packaging technology, will further open up demand space – „resin and metal materials can no longer meet the requirements.“ On June 3, the company’s shares surged more than 11% in Tokyo, marking the largest single-day gain in over a month, bringing the year-to-date gain to about 40%.
TOTO’s core product is electrostatic chucks, which are used to hold silicon wafers in place during chip etching and deposition processes. The company also produces air bearings, bonding capillaries, and high-precision semiconductor tool components. Its ceramic products must withstand extreme temperature differences, corrosive materials, and stringent cleanliness requirements. The company’s advanced ceramics business is expected to post a record operating profit of 27 billion yen ($1.69 billion) for the fiscal year ending March 2026, up 32% year-on-year, with an operating profit margin expected to exceed 40% (compared to less than 9% five years ago). This segment now accounts for about 55% of the company’s total operating profit, surpassing its core bathroom business. The company plans to invest 30 billion yen in semiconductor ceramic capacity expansion and R&D by fiscal 2028. UK activist investor Palliser Capital bought a stake in February and wrote to the board, calling TOTO „the most undervalued, most overlooked AI storage beneficiary on the market,“ and continues to push the company to invest more resources in its ceramics business.