Goldman says Rohm's fiscal Q1 profit far exceeded expectations as AI/server and SiC businesses drive recovery
Goldman Sachs said Rohm's fiscal 2027 first-quarter operating profit reached ¥9.6 billion, well above its ¥6.1 billion forecast and roughly twice the company's own expectation.
Goldman Sachs said Rohm's fiscal 2027 first-quarter operating profit reached ¥9.6 billion, well above its ¥6.1 billion forecast and roughly twice the company's own expectation.
The key changes were in AI/server and silicon-carbide businesses. AI/server-related first-quarter sales rose 67% year over year to an estimated ¥6.5 billion, according to Goldman. The full-year plan of ¥25 billion could exceed ¥30 billion. SiC first-quarter sales increased 53% year over year, while yields continued to improve.
Based on Rohm's current price of ¥4,734, Goldman calculates 39.4% upside.
Goldman's rationale is that higher capacity utilization, the effects of price increases and structural reforms should become more visible in the second half, allowing profits to recover at an accelerating, potentially exponential rate. Competitors are also raising prices, and Rohm plans to intensify its efforts to pass through higher material costs and price increases resulting from tighter supply and demand.
Discussions on integrating Toshiba Semiconductor and Mitsubishi Electric's power-semiconductor businesses are also progressing. Goldman said the earliest profit impact from the Toshiba Semiconductor integration would be in fiscal 2028.
In its conclusion, Goldman said Rohm's first-quarter results, which significantly exceeded expectations, marked the arrival of an earnings inflection point. It expects AI/data-center and SiC businesses, combined with price increases and reforms, to drive an acceleration in profit growth in the second half, while the current share price does not yet fully reflect the increased certainty around the raised guidance.
Goldman views the developments as positive for Rohm, the SiC and power-semiconductor sectors, and the AI-server supply chain. It believes there is a high probability that Rohm will raise its full-year guidance when it reports first-half results, a possibility the market has not fully reflected, leaving room for a significant valuation re-rating.
Goldman identified five catalysts: a full-year guidance increase when first-half results are announced, which it considers highly likely; progress on the Toshiba Semiconductor integration, with a potential earnings impact from fiscal 2028 at the earliest; progress in discussions on integrating Mitsubishi Electric's power-semiconductor business; continued upside surprises in the AI/server business, which could exceed ¥30 billion for the full year; and progress in price negotiations and the pass-through of those increases.
The key changes were in AI/server and silicon-carbide businesses. AI/server-related first-quarter sales rose 67% year over year to an estimated ¥6.5 billion, according to Goldman. The full-year plan of ¥25 billion could exceed ¥30 billion. SiC first-quarter sales increased 53% year over year, while yields continued to improve.
Based on Rohm's current price of ¥4,734, Goldman calculates 39.4% upside.
Goldman's rationale is that higher capacity utilization, the effects of price increases and structural reforms should become more visible in the second half, allowing profits to recover at an accelerating, potentially exponential rate. Competitors are also raising prices, and Rohm plans to intensify its efforts to pass through higher material costs and price increases resulting from tighter supply and demand.
Discussions on integrating Toshiba Semiconductor and Mitsubishi Electric's power-semiconductor businesses are also progressing. Goldman said the earliest profit impact from the Toshiba Semiconductor integration would be in fiscal 2028.
In its conclusion, Goldman said Rohm's first-quarter results, which significantly exceeded expectations, marked the arrival of an earnings inflection point. It expects AI/data-center and SiC businesses, combined with price increases and reforms, to drive an acceleration in profit growth in the second half, while the current share price does not yet fully reflect the increased certainty around the raised guidance.
Goldman views the developments as positive for Rohm, the SiC and power-semiconductor sectors, and the AI-server supply chain. It believes there is a high probability that Rohm will raise its full-year guidance when it reports first-half results, a possibility the market has not fully reflected, leaving room for a significant valuation re-rating.
Goldman identified five catalysts: a full-year guidance increase when first-half results are announced, which it considers highly likely; progress on the Toshiba Semiconductor integration, with a potential earnings impact from fiscal 2028 at the earliest; progress in discussions on integrating Mitsubishi Electric's power-semiconductor business; continued upside surprises in the AI/server business, which could exceed ¥30 billion for the full year; and progress in price negotiations and the pass-through of those increases.