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Japanese electronic components have strong Q2 profits, driven by AI demand but under cost pressure, highlights Murata Manufacturing (Morgan Stanley)

2026-07-09·ima-daily5min-0709-03-4ab55ae6a4

Street Signal | Japanese electronic components have strong Q2 profits, driven by AI demand but under cost pressure, highlights Murata Manufacturing (Morgan Stanley)

Morgan Stanley predicts that the operating profits of the 19 Japanese electronic component companies covered in the April-June quarter will increase by 33.6% year-on-year. Growth is mainly driven by demand for high value-added components in AI and data center applications, especially MLCCs (multilayer ceramic capacitors).

However, rising raw material costs are the main risk. The report shows that Murata Manufacturing Co., Ltd. received the preferred positive rating rating due to its 38% share advantage in the high-end MLCC market, while Taiyo Yuden and Ibiden were downgraded to cautious rating due to excessive valuation or gap in performance expectations.

The investment logic is that the market is shifting from focusing on short-term profit bursts to assessing their sustainability. One-sentence conclusion: Japan's electronic components sector has strong short-term profits, but differentiation has intensified.

The leading company (Murata) with technology and share advantages can better survive the cycle and become the deterministic choice. Pros/Cons: Positives: Murata, TDK, Hirose Electric (positive rating/promising). Bearish: Taiyo Yuden, Ibiden, Nippon Chemi-Con (cautious rating/unfavorable).

Tip: The profit expectations of some highly valued companies may have been fully priced in by the market. The catalyst for future stock prices lies in whether performance can continue to exceed expectations. Catalyst: MLCC price: Pay attention to the price trend of high-end MLCC products (such as those used in AI servers).

Raw material costs: Prices of raw materials such as nickel and palladium used in capacitors fluctuate. AI server shipments: AI chip shipment data from companies such as NVIDIA directly drives demand for high-end components.

Full text

Japanese electronic components have strong Q2 profits, driven by AI demand but under cost pressure, highlights Murata Manufacturing (Morgan Stanley)

Morgan Stanley predicts that the operating profits of the 19 Japanese electronic component companies covered in the April-June quarter will increase by 33.6% year-on-year.

Morgan Stanley predicts that the operating profits of the 19 Japanese electronic component companies covered in the April-June quarter will increase by 33.6% year-on-year. Growth is mainly driven by demand for high value-added components in AI and data center applications, especially MLCCs (multilayer ceramic capacitors). However, rising raw material costs are the main risk. The report shows that Murata Manufacturing Co., Ltd. received the preferred positive rating rating due to its 38% share advantage in the high-end MLCC market, while Taiyo Yuden and Ibiden were downgraded to cautious rating due to excessive valuation or gap in performance expectations. The investment logic is that the market is shifting from focusing on short-term profit bursts to assessing their sustainability. One-sentence conclusion: Japan's electronic components sector has strong short-term profits, but differentiation has intensified. The leading company (Murata) with technology and share advantages can better survive the cycle and become the deterministic choice. Pros/Cons: Positives: Murata, TDK, Hirose Electric (positive rating/promising). Bearish: Taiyo Yuden, Ibiden, Nippon Chemi-Con (cautious rating/unfavorable). Tip: The profit expectations of some highly valued companies may have been fully priced in by the market. The catalyst for future stock prices lies in whether performance can continue to exceed expectations. Catalyst: MLCC price: Pay attention to the price trend of high-end MLCC products (such as those used in AI servers). Raw material costs: Prices of raw materials such as nickel and palladium used in capacitors fluctuate. AI server shipments: AI chip shipment data from companies such as NVIDIA directly drives demand for high-end components.

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