J.P. Morgan reviews valuations across Japan’s semiconductor equipment and technology materials supply chain

Overview

This is a J.P. Morgan industry research report on Japan’s semiconductor/technology materials sector. Its core content includes valuations of related companies, stock price performance, end-market assumptions, CSP capex outlook, SPE sales and orders, DRAM, and semiconductor supply chain breakdowns. Rather than a deep dive into a single company, the report conducts a cross-sectional comparison of multiple companies across supply-chain links such as equipment, materials, front-end, back-end, and packaging.

Core views

The report’s core view is that the investment value of semiconductor equipment and technology materials must be assessed through end demand, cloud service provider capex, AI server and CoWoS demand, the DRAM cycle, and SPE orders. Japanese companies occupy important positions in the supply chain across front-end equipment, cleaning, coating/developing, testing, dicing, grinding, packaging materials, and high-performance substrate materials, but the wide dispersion in ratings indicates that opportunities are more structural in nature.

Analysis framework

The report uses a combination of top-down analysis and supply-chain mapping: it first sets end-market assumptions for PCs, servers, smartphones, AI servers, and others, then observes CSP capex and SPE sales/orders, and subsequently breaks the semiconductor supply chain into front-end, back-end, materials, and testing segments, while incorporating Bloomberg consensus, company materials, Omdia, IDC, WSTS, SEMI, SEAJ, and J.P. Morgan estimates to present valuations and ratings.

Methodology notes

• Industry demand assumptionsEnd-market and CSP capex assumptions

  Deriving semiconductor equipment and materials demand from PCs, servers, smartphones, AI servers, CoWoS, and CSP capex.

  This framework is used to judge whether demand for SPE, advanced packaging, DRAM, and related materials is sustainable, and serves as the report’s main bridge between macro demand and company valuations.

• Supply-chain mappingSemiconductor supply chain/front-end/back-end breakdown

  Mapping lithography, coating/developing, etching, cleaning, CMP, ion implantation, dicing, bonding, molding, testing, and packaging materials to the corresponding companies.

  This method highlights where different companies sit within process steps, helping distinguish the beneficiary paths across equipment, materials, and the packaging chain.

• Valuation and ratingsBloomberg consensus and J.P. Morgan estimates

  Comparing related companies based on market prices, consensus estimates, and J.P. Morgan ratings/price targets.

  The input materials provide valuation charts and rating disclosures, but the current text does not include full price target details, so quantitative valuation requires referring back to the original charts.

Asset mapping & comparison

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

• Japanese semiconductor equipment stocks

  One of the core asset groups covered in this report, affected by SPE sales, order backlog, AI servers, and CSP capex.

  Strengths

  Japanese companies hold important supply-chain positions in coating/developing, cleaning, testing, dicing, grinding, vacuum equipment, and other areas.

  Weaknesses

  Equipment demand is highly sensitive to capex cycles; if SPE orders or customer capacity expansion slow, earnings elasticity may weaken.

  Comparison

  Global reference peers include Applied Materials, Lam Research, ASML, KLA, Teradyne, and others.

  Risks

  Valuation pullback, slower customer investment pacing, export controls, and technology-route changes.

• Front-end equipment chain

  Covers wafer-manufacturing steps such as oxidation, deposition, coating/developing, lithography, etching, cleaning, ion implantation, and CMP.

  Strengths

  Companies such as Tokyo Electron, SCREEN Holdings, ULVAC, Lasertec, and Nikon each correspond to key process and inspection segments.

  Weaknesses

  Competition in front-end equipment is global, and the pace of advanced-node investment may fluctuate.

  Comparison

  Overseas competitors and references include ASML, Applied Materials, Lam Research, KLA, Axcelis, and others.

  Risks

  Advanced-node capex coming in below expectations, customer concentration, technological substitution, and trade restrictions.

• Back-end equipment and advanced packaging materials

  Corresponds to dicing, grinding, bonding, molding, testing, and high-performance packaging substrate materials.

  Strengths

  Demand from AI servers and CoWoS has increased the importance of advanced packaging, build-up film, glass cloth, ultra-thin copper foil, and die bonding film.

  Weaknesses

  Some materials have concentrated customer or application exposure; if demand slows from high growth, earnings elasticity will decline.

  Comparison

  Related companies and references include Disco, Tokyo Seimitsu, TOWA, Nittobo, Ajinomoto, Resonac, Mitsui Kinzoku, Unimicron, Ibiden, Nanya PCB, Shinko Electric, AT&S, and others.

  Risks

  Advanced packaging capacity expansion falling short of expectations, material pricing pressure, share shifts, and customer qualification cycles.

• Memory and logic semiconductor supply chain

  The report maps equipment and materials demand through end applications such as DRAM, logic, automotive, power, analog, and CMOS image sensors.

  Strengths

  DRAM and AI server-related demand can drive upstream equipment, testing, and materials demand.

  Weaknesses

  Recovery paces differ across end markets, and inventory cycles may cause unstable demand transmission.

  Comparison

  Supply-chain references include Samsung Electronics, SK Hynix, Micron, KIOXIA, TSMC, Samsung Electronics, UMC, GlobalFoundries, SMIC, and others.

  Risks

  Memory price volatility, weak end demand, and wafer-fab capex adjustments.

• Japanese technology materials and related materials companies

  The report covers companies related to glass, cement, chemical materials, packaging materials, and semiconductor-related technology materials.

  Strengths

  Some materials companies hold share advantages in high-performance packaging substrates, glass cloth, copper foil, resins, and technology materials.

  Weaknesses

  Materials businesses may be affected by raw material prices, pricing power, and demand from traditional end markets.

  Comparison

  Related companies include AGC, Nippon Electric Glass, Nippon Sheet Glass, Nittobo, Kaneka, Sumitomo Osaka Cement, Taiheiyo Cement, and JX Advanced Metals.

  Risks

  Price increases being implemented below expectations, downward demand cycles, and margins being eroded by input costs.

Key data

• Report date2026-06-22The report page shows Japan Equity Research, 22 June 2026.
• Research institutionJ.P. Morgan Securities Japan Co., Ltd.The cover page shows the research institution and the analyst’s contact information.
• AuthorMio ShikanaiThe analyst’s name appears on both the cover and the coverage page.
• Number of covered companies18The disclosure page lists Companies Discussed in This Report.
• Price reference date2026-06-19The disclosure page states that all prices, unless otherwise specified, are closing prices as of June 19, 2026.
• Rating distribution12 OW, 5 N, 1 UWOW includes Tokyo Electron, SCREEN Holdings, Advantest, etc.; UW is Nikon.
• Main data sourcesBloomberg Finance L.P.、公司报告、Omdia、IDC、WSTS、SEMI、SEAJ、J.P. Morgan estimatesThese sources are cited in the footnotes of multiple charts.
• Selected covered companies and pricesTokyo Electron 8035.T/¥75,360/OW；Advantest 6857.T/¥31,740/OW；Disco 6146.T/¥84,900/N；Nikon 7731.T/¥2,153/UW；ULVAC 6728.T/¥10,255/OWPrices and ratings come from the disclosure page and are all based on the June 19, 2026 closing price.

Impact & implications

The report’s investment implication is that Japan’s semiconductor equipment and technology materials sector should not be treated solely through a single semiconductor cycle, but rather broken down into specific drivers such as AI servers, CSP capex, CoWoS, DRAM, front-end equipment, back-end equipment, and advanced packaging materials. The rating distribution shows that J.P. Morgan favors select companies with structural demand or key supply-chain positions, while remaining selective on valuation, order cycles, and stock-specific differentiation.

Risks

• Semiconductor capex and SPE orders decline, causing equipment and materials demand to fall short of expectations.
• The investment pace of AI servers, CoWoS, or CSPs is below the report’s assumptions.
• Uneven recovery across end applications such as DRAM, logic, and power/analog affects supply-chain transmission.
• Japanese equity valuations already reflect relatively high growth expectations; if earnings or order verification is insufficient, valuation compression may occur.
• Geopolitics, export controls, sanctions compliance, and regional supply-chain restrictions may affect customers of semiconductor equipment and materials.
• Disclosures show that J.P. Morgan has market-making, client, investment banking, or shareholding relationships with multiple covered companies, so potential conflicts of interest should be noted.

What to watch

• Whether CSP capex outlook continues to be revised upward or begins to slow.
• Whether forecasts for AI servers and CoWoS are realized.
• Changes in industry SPE sales and order backlog.
• Changes in DRAM demand and Omdia estimates.
• Orders for key front-end equipment, including lithography, etching, coating/developing, CMP, cleaning, and ion implantation.
• Share, pricing, and capacity expansion progress of advanced packaging materials, including build-up film, glass cloth, ultra-thin copper foil, and die bonding film.
• Subsequent rating changes, price targets, and stock price movements after June 19, 2026 for the covered companies.