Shin-Etsu Chemical
4063.THIGHSilicon Wafers / Materials · Weight: 10%· Data as of 2026-05-05
Investment Thesis
#1 global silicon wafer maker. FY2026 actual (released Apr 28): Revenue ¥2,574B (2nd highest ever), Electronics Materials +8.7% YoY (¥1,115.7B = 43% of revenue) driven by HBM/AI demand. OP ¥635.2B (-14.4%, PVC drag). New ¥250B buyback announced (May 2026–Apr 2027). Gunma ¥83B lithography hub operational. GaN-on-QST: IMEC >650V world record. SK Hynix warned wafer shortage persists through 2030 — Shin-Etsu's 27% global 300mm share benefits structurally. Shintech is a US domestic PVC producer — tariffs are INSULATED / BENEFICIAL. Net cash ¥1.4T.
Risk
FY2027 guidance WITHHELD — no forward earnings anchor until Q1 FY2027 results (Aug 2026). PVC segment (-5.8% YoY, ¥981.3B) recovers slowly; China added 1.9M tons PVC capacity in 2025. Chinese wafer makers expanding but at 4.2% global share, limited to commodity grades (not EUV advanced). EPS missed analyst consensus by ~4% in FY2026.
Monitoring Trigger
FY2026 RELEASED Apr 28: OP ¥635.2B (-14.4%), Electronics Materials +8.7%, FY2027 guidance WITHHELD. Next trigger: Q1 FY2027 (Aug 2026) — if PVC shows recovery AND Electronics Materials margin holds >34%, ADD. If analyst consensus FY2027 OP (¥723.8B) misses by >15%, TRIM. Shintech $3.4B expansion milestones (Phase 1 ~2030).
Key Dates
Update History
UPGRADED: CEO 'AI stock' pivot, Isesaki plant, GaN-on-QST 800V record, 5.9% total yield, PVC headwind turning
FY2026 full-year results internalized (released Apr 28). Electronics Materials +8.7% YoY. PB corrected 2.81→1.86 (near historical median). FY2027 guidance withheld — uncertainty flagged. New ¥250B buyback. SK Hynix warns wafer shortage through 2030. Thesis HOLD.
Key Metrics
Business Segments
| Segment | Revenue | Share | Description |
|---|---|---|---|
| Electronics Materials | ¥1,115.7B (FY2026) | ~43% | Wafers #1, photoresists, photomask blanks — +8.7% YoY, ~34.8% OP margin |
| Living Environment & Infrastructure (Shintech) | ¥981.3B (FY2026) | ~38% | PVC, caustic soda — US domestic producer (tariff insulated). -5.8% YoY. $3.4B expansion to ~2030. |
| Functional/Other | ~¥477B (FY2026) | ~19% | Magnets, silicones, LED, processing, GaN-on-QST (pre-commercial) |
Supply Chain Evidence
| Evidence | Customer | Product | Detail |
|---|---|---|---|
| confirmed | TSMC | 300mm wafers, EUV photomask blanks, EUV photoresists | Deep collaborative partnership. Gunma plant exports photoresists to Korea, US, Taiwan. TSMC N2/N3 logic. TSMC CapEx $52-56B in 2026.[source](2026-04) |
| confirmed | Samsung | Wafers for NAND/DRAM/logic/HBM; EUV photomask blanks (22-41% global share) | Samsung +47% HBM capacity to 250K WPM by end-2026; HBM3E prices +20% for 2026.[source](2026-04) |
| confirmed | SK Hynix | Advanced ultra-flat wafers for HBM4 | HBM4 ramp underway (M15X fab Feb 2026). SK Group chairman: wafer shortage through 2030, supply lags demand 20%+.[source](2026-03) |
| confirmed | US reshoring fabs | Wafers + photoresists for TSMC AZ, Samsung TX, Intel OH | CHIPS Act friend-shore supplier. Gunma plant provides export capacity.[source](2026-04) |
Sources & References
Peer Comparison
| Company | PE | Fwd PE | ROE | Op Margin | FCF |
|---|---|---|---|---|---|
| Kokusai Electric | 37.06 | 30.51 | 16.35% | 18.6% | +¥16B |
| Ibiden | 112 | 62 | 11.5% | 14.5% | -¥100B |
| Tokyo Electron | 40.21 | 30.85 | 23.9% | 24.2% | +¥398B |
| Advantest | 54 | 44 | 49.3% | 44.2% | +¥375B est. |
| SCREEN Holdings | 23.29 | 17.85 | 19.8% | 19.0% | +¥49.4B |
| Shin-Etsu Chemical | 25 | 23.5 | 11.1% | 24.7% | +¥346B |
| DISCO Corp | 55.44 | 43 | N/A | 42.3% | +¥63.7B (OCF ¥133.5B minus capex ¥69.8B; capex doubled FY2025→FY2026) |
| Lasertec | 44.17 | 45.06 | 43.0% | 46.1% | +¥96B |
| Resonac Holdings | 83.53 | ~31.6x | 5.72% | 4.3% | +¥24B |
| Renesas Electronics | Loss | 17.78 | -2.1% GAAP / ~10.5% Non-GAAP | 33.7% Non-GAAP Q1 2026 (H1 guided 31.3%) | +¥364B (confirmed: OCF ¥453B minus capex ¥89B) |
| SUMCO | Loss | N/A | -1.54% | -0.8% | -¥11B |
| Socionext | 36.77 | 22.44 | 6.0% | 7.5% | -¥4B |