J.P. Morgan feedback: European and U.S. investors are overall more optimistic on Japanese semiconductor and technology materials stocks

Overview

This report summarizes J.P. Morgan's feedback following meetings with European and U.S. investors during the week of June 22, 2026. The overall impression is that although some investors remain cautious about the high valuations of Japanese semiconductor and technology materials stocks, mainstream sentiment is optimistic. The three key themes investors are focused on are possible upward revisions to WFE market forecasts, continued improvement in NAND flash LTAs and pricing expectations, and TSMC/DRAM exposure and pricing actions as important criteria for stock selection.

Core views

The report's core view is that the Japanese semiconductor equipment and technology materials chain still has upside catalysts. The WFE market could exceed current forecasts, driven by TSMC capex, DRAM demand, and potential Terafab investment; Kioxia benefits from a tight NAND balance, eSSD price increases, stronger LTA terms, and Super High IOPS; Tokyo Electron and SCREEN Holdings benefit from front-end equipment and DRAM technology upgrades; while Advantest faces concerns over GPU/ASIC test times and market share, opportunities in CPUs, CPO, and outsourced testing still support earnings; Nittobo and JX Advanced Metals rely respectively on expanding demand for T-glass/NER-glass and mid-term growth in InP substrates.

Analysis framework

The report uses a combination of investor meeting feedback, industry market size forecasts, company business exposure, pricing power, valuation tables, and performance tables for covered companies, first assessing the industry cycle direction and then screening stocks based on product exposure and catalysts.

Methodology notes

• Industry cycle and capital expenditureWFE market forecast

  Semiconductor capex cycles are measured by wafer fab equipment spending.

  J.P. Morgan uses CY2026-CY2028 WFE market size forecasts to assess the equipment chain outlook, and discusses whether TSMC capex, DRAM, and Terafab could bring upside beyond the base forecast.

• Memory pricing and contract structureLTA and take-or-pay

  Long-term purchase agreements and non-cancellable purchase clauses can enhance supply-demand visibility and price resilience.

  After Micron Technology's earnings call mentioned non-cancellable LTAs based on five-year contracts, investors raised their expectations for Kioxia to advance similar contracts and viewed this as a key variable for NAND earnings elasticity.

• Stock selectionTSMC/DRAM exposure and pricing power

  When selecting semiconductor equipment and materials stocks, focus on their sales exposure to high-growth customers and applications, as well as their ability to improve profitability through price adjustments.

  The report believes investors prefer companies with high TSMC/DRAM sales exposure, those benefiting from rising technical difficulty, and those more capable of pushing through price increases.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• KIOXIA Holdings (285A.T)

  The report's top pick, benefiting from NAND, eSSD, LTA, and Super High IOPS themes.

  Strengths

  Investor discussions are most concentrated here; tight NAND supply-demand, rising eSSD prices, potential non-cancellable LTAs, and high SLC unit pricing are all favorable for earnings.

  Weaknesses

  Consumer NAND prices may decline from 2027, and there is still uncertainty around the capacity loss ratio for Super High IOPS.

  Comparison

  Investor pricing expectations are more optimistic than both J.P. Morgan's and Asian investors' expectations, indicating strong market sentiment.

  Risks

  NAND price increases come in below expectations, LTA progress falls short of expectations, or SLC product ramp-up is slower than expected.

• Tokyo Electron (8035.T)

  A core beneficiary in front-end equipment, rated Overweight.

  Strengths

  It holds strong positions in equipment categories that may outperform the WFE market, such as etch, deposition, and EUV co-development, while its high DRAM exposure and yen-denominated sales support price increase acceptance.

  Weaknesses

  Against a backdrop of high valuations, it is highly dependent on the realization of WFE upside revisions and the DRAM cycle.

  Comparison

  Compared with SCREEN Holdings, which has lower DRAM exposure, Tokyo Electron currently benefits more directly from expanded DRAM investment.

  Risks

  WFE cycle underperforms expectations, customer capex is delayed, or pricing actions are less effective than expected.

• Advantest (6857.T)

  A beneficiary in semiconductor test equipment, rated Overweight.

  Strengths

  The proportion of new systems is increasing, CPU and CPO opportunities are expanding, and customers that previously used in-house testers may increase outsourced testing.

  Weaknesses

  Share price upside is constrained by expectations of shorter GPU test times, concerns that ASIC test times may be shorter than GPUs, and worries about ASIC market share loss.

  Comparison

  Compared with front-end equipment companies, Advantest's key variables are more concentrated in test time, SoC tester TAM, and customer outsourcing trends.

  Risks

  ASIC share loss, next-generation GPU test time growth below expectations, or management failing to raise SoC tester TAM guidance.

• SCREEN Holdings (7735.T)

  A potential beneficiary of front-end cleaning equipment and DRAM upgrades, rated Overweight.

  Strengths

  Benefits from WFE growth and increased cleaning process complexity driven by DRAM technology advances, with room for future DRAM share gains.

  Weaknesses

  DRAM applications accounted for only 12% of FY2025 SPE sales, below Tokyo Electron and Kokusai.

  Comparison

  Current DRAM exposure is lower than peers, which is one factor behind its valuation discount, but it also provides room for subsequent improvement.

  Risks

  DRAM share gains are slower than expected, cleaning process demand falls short of expectations, or WFE upside fails to materialize.

• Nittobo (3110.T)

  A technology materials name rated Overweight, with investors focused on catalysts for a share price turning point.

  Strengths

  T-glass TAM may expand with MLC and AI-related DDR applications, and management already has a plan to triple capacity by the end of FY2027.

  Weaknesses

  The near-term share price is constrained by the lack of additional price hikes, possible easing in T-glass supply-demand, PTFE's impact on the growth outlook for NE/NER-glass, and the lack of near-term catalysts.

  Comparison

  Compared with new entrants, the company has stronger technical capabilities, and it may take competitors several years to improve yields.

  Risks

  Intensifying competition, PTFE substitution risk, or delays in investment or price hike announcements.

• JX Advanced Metals (5016.T)

  A medium-term growth name in semiconductor materials and InP substrates, rated Overweight.

  Strengths

  Its semiconductor materials business has high margins, and InP substrate expansion targets the high-barrier optoelectronic convergence field, with management planning a 7-10x capacity increase by FY2030.

  Weaknesses

  Investor interest is uneven, partly affected by concerns over copper prices.

  Comparison

  Compared with the traditional sputtering target-driven model, investment in InP substrates places more emphasis on medium- to long-term growth and maintaining margins.

  Risks

  Copper price volatility, slower-than-expected realization of InP demand, and execution risks in expansion and price revisions.

Key data

• WFE market forecastUS$159 billion in CY2026, US$205 billion in CY2027, and US$237 billion in CY2028Corresponding YoY growth rates are +28%, +29%, and +16%, and Terafab figures are not included.
• Potential Terafab investment sizeInitial investment of US$55 billion, total investment of US$119 billionU.S. investors showed strong interest, with some discussions around the possibility of the CY2028 WFE market exceeding US$250 billion.
• Kioxia NAND price expectationsInvestors expect +70-90% QoQ in Apr-Jun, +20-35% QoQ in Jul-Sep, and +10-30% QoQ in Oct-DecHigher than J.P. Morgan's forecasts of +69%, +20%, and +8%, and also higher than Asian investors' expectations.
• KIOXIA Holdings valuation snapshotShare price ¥88,450, target price ¥155,000, rating OverweightPrice as of the close on June 29, 2026.
• DRAM sales exposureTokyo Electron 31%, Kokusai 30%, SCREEN Holdings 12%The report believes SCREEN Holdings' lower DRAM exposure is one factor behind its valuation discount, but future increases in process complexity for cleaning could drive share gains.
• Nittobo T-glass capacityPlanned to reach 3x the FY2023-end level by the end of FY2027The report expects the company may announce a large investment for demand beyond FY2028 and cover the investment cost through price increases.
• JX Advanced Metals InP substrate expansionCapacity to increase 7-10x by FY2030The company is advancing expansion on the premise of price revisions, aiming to form a new medium-term profit pillar in the optoelectronic convergence field.

Impact & implications

If investor expectations for WFE upside revisions, NAND pricing, and materials capacity expansion continue to strengthen, leading Japanese semiconductor equipment and technology materials companies may continue to receive valuation support; however, high valuations also make the market more sensitive to the delivery of orders, pricing, capacity expansion, and management guidance. At the portfolio level, the report prefers companies with clear demand drivers, contract or pricing support, and technological barriers.

Risks

• Elevated valuations may limit further upside for semiconductor and technology materials stocks.
• If TSMC capex, DRAM investment, or Terafab progress falls short of expectations, the WFE upside revision thesis may weaken.
• Consumer NAND application prices may decline from 2027, affecting Kioxia's earnings elasticity.
• Advantest faces uncertainty around GPU/ASIC test times, ASIC share, and SoC tester TAM.
• Nittobo faces risks from T-glass competition, PTFE substitution, and insufficient near-term catalysts.
• JX Advanced Metals is exposed to copper price risk and the risk that its InP expansion thesis does not materialize as expected.
• J.P. Morgan has market-making, client relationship, shareholding, or investment banking-related disclosures with multiple covered companies, and investors should pay attention to potential conflicts of interest.

What to watch

• Terafab investment size, construction timeline, and whether it is incorporated into WFE market expectations.
• Whether the CY2028 WFE market has a chance to exceed US$250 billion.
• Whether Kioxia advances non-cancellable LTAs, and the actual price increases for eSSD and NAND in Apr-Jun, Jul-Sep, and Oct-Dec.
• The ramp-up pace of SLC-based Super High IOPS and its impact on NAND supply and demand.
• Whether CPU tester trends and SoC tester TAM guidance are raised at Advantest's Apr-Jun earnings call.
• Order and share changes for Tokyo Electron and SCREEN Holdings in DRAM-related equipment.
• Whether Nittobo announces a large investment and supporting price hikes in the Jul-Sep quarter.
• JX Advanced Metals' InP substrate expansion, price revisions, and medium-term earnings contribution.