IR & Research Intelligence, Sessa Investment Research

Sessa Investment Research

IR & Research Intelligence

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<ul><li>As can be seen from the graph below, the major JPY 12.6bn capex initiative to secure production capacity to enable consolidated net sales to increase by 1.5x (announced in May-2022) peaked in FY24/3 and depreciation peaked in FY25/3.</li><li>With confirmation of the upturn in the silicon cycle, earnings have entered a full-fledged recovery, with Q1 OP posting a high 41% progress ratio relative to the 4-year historical average of 27%. The key takeaway from the graph below is the strong recovery in EBITDA.</li><li>The current high P/E is a common feature at the start of cyclical recoveries, while EV/EBITDA has only just returned to its long-term historical average (see P21). </li></ul>

As can be seen from the graph below, the major JPY 12.6bn capex initiative to secure production capacity to enable consolidated net sales to increase by 1.5x (announced in May-2022) peaked in FY24/3 and depreciation peaked in FY25/3.With confirmation of the upturn in the silicon cycle, earnings have entered a full-fledged recovery, with Q1 OP posting a high 41% progress ratio relative to the 4-year historical average of 27%. The key takeaway from the graph below is the strong recovery in EBITDA.The current high P/E is a common feature at the start of cyclical recoveries, while EV/EBITDA has only just returned to its long-term historical average (see P21). 

Full Report - TOREX SEMICONDUCTOR (6616 JP) - September 25, 2025

<ul><li>As can be seen from the exhibit below, as of May 31, 2025, TOREX had 1 unmet criterion out of the criteria required to maintain listing on the TSE prime market.</li><li>Market capitalization of tradable shares of JPY 8.12bn was below the requirement of JPY 10.0bn or more. The number of tradable shares subtracts: 1) the number of shares held by major shareholders who individually own 10% or more of the number of listed shares (however the number of shares held by investment trusts or pension trusts are included), 2) the number of shares held by officers, etc., 3) the number of treasury shares, and 4) the number of shares held by common banks, insurance companies and business corporations in Japan.</li><li>The tradable shares ratio is the number of tradable shares ÷ the number of listed shares. Tradable market capitalization is the tradable shares ratio × market capitalization.</li></ul>

As can be seen from the exhibit below, as of May 31, 2025, TOREX had 1 unmet criterion out of the criteria required to maintain listing on the TSE prime market.Market capitalization of tradable shares of JPY 8.12bn was below the requirement of JPY 10.0bn or more. The number of tradable shares subtracts: 1) the number of shares held by major shareholders who individually own 10% or more of the number of listed shares (however the number of shares held by investment trusts or pension trusts are included), 2) the number of shares held by officers, etc., 3) the number of treasury shares, and 4) the number of shares held by common banks, insurance companies and business corporations in Japan.The tradable shares ratio is the number of tradable shares ÷ the number of listed shares. Tradable market capitalization is the tradable shares ratio × market capitalization.

Torex Semiconductor (6616 Jp) - September 12, 2025

<ul><li>Despite tariffs and geopolitics reshaping global supply chains, the cyclical recovery in the semiconductor market is continuing, while customer inventories remain at low levels.</li><li>This coincides with a full-fledged recovery in PC demand driven by the October Windows 10 end-of-service PC replacement, and rapid diffusion of AI PCs (equipped with dedicated AI accelerators designed to optimize and accelerate AI tasks, providing improved performance and efficiency in handling GenAI workloads without relying on external servers or cloud services).</li><li>Q1 2025 Gartner worldwide PC shipments increased +4.8% YoY, with Q2 +4.4% (the US slowed to flat after frontloading ahead of tariffs), for 1H 2025 +4.7%, entering a full-fledged recovery. </li></ul>

Despite tariffs and geopolitics reshaping global supply chains, the cyclical recovery in the semiconductor market is continuing, while customer inventories remain at low levels.This coincides with a full-fledged recovery in PC demand driven by the October Windows 10 end-of-service PC replacement, and rapid diffusion of AI PCs (equipped with dedicated AI accelerators designed to optimize and accelerate AI tasks, providing improved performance and efficiency in handling GenAI workloads without relying on external servers or cloud services).Q1 2025 Gartner worldwide PC shipments increased +4.8% YoY, with Q2 +4.4% (the US slowed to flat after frontloading ahead of tariffs), for 1H 2025 +4.7%, entering a full-fledged recovery. 

Q1 Follow-Up - TOREX SEMICONDUCTOR (6616 JP) - August 28, 2025

<ul><li>While delayed by roughly one year, likely due to the glut of inventory accumulation in the wake of the spike in special demand caused by the global pandemic, and subsequent extreme stress on global supply chains, resulting in double-booking orders, etc., earnings have started a full-fledged recovery against the backdrop of an unusual situation of low levels of distribution inventories across all end markets just as the silicon cycle enters an upturn.</li><li>This coincides with a full-fledged recovery in PC demand driven by the October Windows 10 end-of-service PC replacement, and rapid diffusion of AI PCs (equipped with dedicated AI accelerators designed to optimize and accelerate AI tasks on a device, providing improved performance and efficiency in handling AI and GenAI workloads without relying on external servers or cloud services).</li><li>Q1 2025 Gartner PC shipments were: worldwide +4.8% YoY, US +12.6% and Japan +15.6%.</li></ul>

While delayed by roughly one year, likely due to the glut of inventory accumulation in the wake of the spike in special demand caused by the global pandemic, and subsequent extreme stress on global supply chains, resulting in double-booking orders, etc., earnings have started a full-fledged recovery against the backdrop of an unusual situation of low levels of distribution inventories across all end markets just as the silicon cycle enters an upturn.This coincides with a full-fledged recovery in PC demand driven by the October Windows 10 end-of-service PC replacement, and rapid diffusion of AI PCs (equipped with dedicated AI accelerators designed to optimize and accelerate AI tasks on a device, providing improved performance and efficiency in handling AI and GenAI workloads without relying on external servers or cloud services).Q1 2025 Gartner PC shipments were: worldwide +4.8% YoY, US +12.6% and Japan +15.6%.

Torex Semiconductor (6616 JP) - Start of a Full-Fledged Recovery from FY26/3

<ul><li>FY24/3 results were consolidated net sales -19.4% YoY, OP dropping from JPY 3,976mn in FY23/3 to an operating loss of JPY 1,778mn, and profit attributable to owners of parent dropping from JPY 2,179mn in FY23/3 to a net loss of JPY 4,297mn. Nevertheless, the Company maintained the dividend of 56 yen.</li><li>The two main losses incurred in FY24/3 were 1) inventory write-down in mfg. cost of sales and 2) extraordinary impairment loss. Following weak 1H FY25/3 results, partly reflecting the Q2 foreign exchange loss of JPY 298mn due to the sharp yen appreciation in Q2, TOREX revised down its full-term forecasts for FY25/3, noting that the original budget had anticipated a completion of the adjustment of distribution inventories during the 1H, and a clear recovery in demand from the 2H.</li><li>TOREX again revised down full-term profits, to net loss on Q3 results, with Phenitec citing weakness in industrial equipment, etc., particularly in North America (see our 2/17 Q3 Flash for details). Since depreciation peaks in FY25/3, it will become easier to record profits going forward.</li></ul>

FY24/3 results were consolidated net sales -19.4% YoY, OP dropping from JPY 3,976mn in FY23/3 to an operating loss of JPY 1,778mn, and profit attributable to owners of parent dropping from JPY 2,179mn in FY23/3 to a net loss of JPY 4,297mn. Nevertheless, the Company maintained the dividend of 56 yen.The two main losses incurred in FY24/3 were 1) inventory write-down in mfg. cost of sales and 2) extraordinary impairment loss. Following weak 1H FY25/3 results, partly reflecting the Q2 foreign exchange loss of JPY 298mn due to the sharp yen appreciation in Q2, TOREX revised down its full-term forecasts for FY25/3, noting that the original budget had anticipated a completion of the adjustment of distribution inventories during the 1H, and a clear recovery in demand from the 2H.TOREX again revised down full-term profits, to net loss on Q3 results, with Phenitec citing weakness in industrial equipment, etc., particularly in North America (see our 2/17 Q3 Flash for details). Since depreciation peaks in FY25/3, it will become easier to record profits going forward.

Torex Semiconductor (6616 JP) - Bright Spots on the Horizon for FY26/3

Japan

Torex Semiconductor Ltd. designs and develops analog power management ICs. The Company offers products including voltage detectors, regulators, and DC/DC converters used in small electronic devices.

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Torex Semiconductor (6616 JP)

Full Report - TOREX SEMICONDUCTOR (6616 JP) - September 25, 2025

As can be seen from the graph below, the major JPY 12.6bn capex initiative to secure production capacity to enable consolidated net sales to...

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