JPMorgan is positive on the 4-6 month earnings period for semiconductors/technology materials, focusing on WFE upside, price revisions, and non-domestic cement drivers
AI summary card
JPMorgan is positive on the 4-6 month earnings period for semiconductors/technology materials, focusing on WFE upside, price revisions, and non-domestic cement drivers
The report ranks 4-6 month earnings focus as semiconductors above glass above cement, with key themes centered on semiconductor WFE growth and price revisions, long-term TAM expansion in glass, and overseas and non-domestic semiconductor-related contributions for cement companies.
- JPMorgan maintains a constructive stance on semiconductor-related stocks, arguing that recent pullback due to fears of AI overheating in the market has not changed earnings expectations, which are still being upgraded.
- The WFE market outlook has been raised to year-over-year growth of 28% in 2026, 29% in 2027, and 16% in 2028; the report believes there is still further upside potential.
- Semiconductor focus is on KIOXIA Holdings, Tokyo Electron, and Advantest, with attention on storage price trend, LTA direction, Super High IOPS progress, price revisions, and GPU/ASIC/CPU/CPO demand.
- In glass, the report focuses on Nittobo and Nippon Electric Glass, with key questions around capacity expansion, pricing strategy, and long-term TAM growth driven by M9 and MLC.
- For cement, against weak domestic Japan demand, the focus has shifted to non-domestic or non-traditional drivers, including the recovery of Sumitomo Osaka Cement's electrostatic chuck business and Taiheiyo Cement's U.S. business synergies.
Report interpretation
Overview
This is a JPMorgan forward-looking earnings note for Japanese semiconductor/technology materials coverage names for the 4-6 month period. The report argues that the most important sectors to watch in this period are semiconductors, glass, and cement. In semiconductors, although related stocks have recently pulled back due to concern that the AI cycle is overheated, institutions remain constructive, citing ongoing upward revisions to earnings expectations, an upgraded WFE growth outlook, and potential further improvements. In glass, the report focuses on Nittobo capacity and pricing, and long-term TAM expansion from applications such as M9 and MLC. In cement, with domestic Japan demand still weak, investment focus shifts to export, capacity optimization, semiconductor-related materials, and U.S. business as non-domestic profit drivers.
Core views
Core views include: first, the semiconductor chain remains the most important area for earnings surveillance, with WFE upside and price revisions potentially adding further earnings leverage; second, Tokyo Electron's gross margin expansion target may be reached earlier than two years, and price revisions plus additional margin-improving initiatives are worth monitoring; third, Advantest may benefit from GPU and ASIC demand, while CPU and CPO-related TAM expansion could support further earnings upside; fourth, although Nittobo has fallen sharply on competition and pricing-strategy concerns, the report remains constructive on its long-term relevance and TAM growth in its materials portfolio; fifth, while domestic cement demand is weak, Sumitomo Osaka Cement's electrostatic chuck business for NAND and Taiheiyo Cement's U.S. concrete assets in California may be differentiating catalysts.
Analysis framework
The report uses forward-looking earnings analysis and cross-company comparisons, combining sector cycle conditions, order and capex cycle, price revisions, capacity planning, TAM expansion, and regional profit drivers to assess what should be prioritized in the 4-6 month earnings period. Semiconductors are analyzed mainly through WFE, pricing, and end-market AI-related demand; glass is framed around capacity, pricing, and new materials applications; cement is framed around overseas and semiconductor-material-driven earnings under weak domestic demand.
Methodology notes
Using wafer fab equipment spending growth to measure the semiconductor capex cycle.
The report treats WFE as a key indicator for assessing semiconductor cyclical strength and provides YoY growth forecasts for 2026-2028 to support a constructive view on semiconductor materials and equipment-related companies.
Identifying catalysts around price, capacity, orders, and management commentary around earnings announcements.
The report tracks KIOXIA pricing and LTA direction, Tokyo Electron price revisions, Advantest downstream demand, Nittobo capacity expansion, and non-domestic profit drivers for cement companies.
Assessing long-term revenue space through penetration of new applications or new materials.
The glass section tracks adoption of NER-glass in M9 and future T-glass use in MLC, while the semiconductor test segment looks at potential TAM expansion from CPU and CPO.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- KIOXIA Holdings (285A.T)Semiconductor key coverage name, rating Overweight
- Strengths
- Monitors storage price trend, LTA direction, and Super High IOPS progress, with benefits from semiconductor demand and improving WFE cycle conditions.
- Weaknesses
- Recent semiconductor-related stock pullback from AI overheating concerns and both storage pricing and long-term contract direction still need validation.
- Comparison
- Among semiconductor key coverage names, it is listed as a major focus alongside Tokyo Electron and Advantest.
- Risks
- Price trend weaker than expected, unclear LTA progress, and AI-related demand cooling.
- Tokyo Electron (8035.T)Semiconductor equipment key coverage name, rating Overweight
- Strengths
- Progress in price revisions and additional margin-improvement measures could push gross margin toward the 50% target earlier.
- Weaknesses
- Markets are waiting for management to provide concrete updates on price revisions and additional measures.
- Comparison
- Compared with KIOXIA, it is more focused on the equipment and margin-improvement narrative; compared with Advantest, it is more focused on price revisions and gross margin.
- Risks
- WFE growth below expectations, slower-than-expected progress on price revisions, and gross margin improvement falling short.
- Advantest (6857.T)Semiconductor test equipment key coverage name, rating Overweight
- Strengths
- GPU and ASIC demand remain the short-term focus, while CPU and CPO TAM growth may support further earnings upside.
- Weaknesses
- Earnings leverage depends on sustained high-end compute demand and management commentary on CPU and CPO.
- Comparison
- Compared with Tokyo Electron, it is more directly exposed to test demand and AI compute-related applications.
- Risks
- GPU/ASIC demand slows, CPU/CPO TAM expansion falls short, and AI capex cadence is more volatile.
- Nittobo (3110.T)Glass key coverage name, rating Overweight
- Strengths
- Long-term outlook is positive on its relevance in M9 and MLC-related glass materials, with NER-glass and T-glass applications potentially driving TAM expansion.
- Weaknesses
- The stock has already sold off significantly due to heightened competition and pricing-strategy concerns, and may not disclose a specific expansion plan in the short term.
- Comparison
- Alongside Nippon Electric Glass as glass key coverage names, Nittobo is more concentrated on capacity expansion and high-end materials TAM.
- Risks
- Rising competition, pricing pressure, and uncertainty around the direction of capacity expansion.
- Nippon Electric Glass (5214.T)Glass key coverage name, rating Overweight
- Strengths
- Restructuring in the glass-fiber business and commentary on recovery in semiconductor support glass could improve market expectations.
- Weaknesses
- Recovery still depends on restructuring details and improving demand for semiconductor-supporting glass.
- Comparison
- Compared with Nittobo, the report places more emphasis on details of the glass-fiber business restructuring announced on July 6.
- Risks
- Restructuring outcomes below expectations and slower-than-expected recovery in semiconductor support glass demand.
- Sumitomo Osaka Cement (5232.T)Cement sector watch list
- Strengths
- Electrostatic chuck business has strong positioning in NAND applications and may benefit from 2026 NAND capex growth.
- Weaknesses
- Domestic Japan cement demand remains weak, and core cement operations lack short-term major catalysts.
- Comparison
- Compared with Taiheiyo Cement, it is more tied to semiconductor materials-related drivers.
- Risks
- NAND capex growth below expectations, underperformance in electrostatic chuck recovery, and sustained weakness in domestic cement demand.
- Taiheiyo Cement (5233.T)Cement sector watch list
- Strengths
- After acquiring Vulcan Materials' ready-mix concrete assets in California, potential synergy from U.S. operations is a key area to watch.
- Weaknesses
- Domestic demand remains weak, with limited major announcement catalyst expected during the 4-6 month earnings period.
- Comparison
- Compared with Sumitomo Osaka Cement, this name is more linked to overseas business and U.S. asset-synergy themes.
- Risks
- U.S. synergy execution below expectations, continued domestic demand weakness, and limited capacity utilization improvement.
Key data
- 4-6 Month Earnings Focus OrderSemiconductors > Glass > CementThe report explicitly ranks the three sectors in this order of focus.
- WFE Market ForecastYoY +28% in 2026, YoY +29% in 2027, YoY +16% in 2028JPMorgan raised the WFE market outlook on June 17 and said further upside remains.
- Tokyo Electron Gross Margin TargetReach 50% within two yearsThe company stated this target in its 1-3 month results, and the report expects it may be achieved earlier.
- NAND Capex Expectation2026 calendar year YoY +30%This assumption is used to support monitoring of Sumitomo Osaka Cement electrostatic chuck business recovery.
- J.P. Morgan Global Equities Research Rating DistributionOverweight 53%, Neutral 36%, Underweight 12%As disclosed by table data on July 4, 2026; percentages may not sum to 100% due to rounding.
Impact & implications
For investors, the key implication is that the earnings-upgrade cycle for semiconductor materials and equipment-related companies may not yet have ended; short-term valuation compression due to AI overheating concerns has not altered the institution's constructive view. Glass companies face higher short-term uncertainty around capacity announcements, but long-term TAM expansion can still support valuation discussion; cement companies need to shift from a traditional domestic Japan demand framework toward company-specific overseas, export, capacity optimization, and semiconductor-related business drivers.
Risks
- Concerns over AI overheating may continue to pressure valuation of semiconductor-related stocks.
- If WFE growth, price revisions, or margin improvement fall short of expectations, the semiconductor-chain earnings-upgrade narrative would weaken.
- The glass segment faces greater competition, pricing-strategy skepticism, and uncertainty around capacity expansion pacing.
- Sustained weakness in domestic Japan cement demand could mean limited short-term earnings-call and major-announcement catalysts.
- The report contains forecasts and institutional views, and actual outcomes may differ materially from those forecasts.
What to watch
- KIOXIA's near-term price trend, LTA direction, and Super High IOPS progress.
- Updates from Tokyo Electron on price revisions, additional margin-improvement measures, and progress toward the 50% gross margin target.
- Advantest commentary on demand trends for GPU, ASIC, CPU, and CPO.
- Whether Nittobo discloses the direction of its capacity expansion and pricing strategy for M9 and MLC-related glass materials.
- Nippon Electric Glass glass-fiber business restructuring details and signs of recovery in semiconductor-supporting glass.
- The extent of recovery in Sumitomo Osaka Cement's electrostatic chuck business, especially in NAND applications.
- Progress of synergies after Taiheiyo Cement acquired Vulcan Materials' ready-mix concrete business assets in California.