Aluminum Electrolytic Capacitors and ABF Substrates Remain Strong, with Electronic-Component Conditions Better Than Seasonality
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Aluminum Electrolytic Capacitors and ABF Substrates Remain Strong, with Electronic-Component Conditions Better Than Seasonality
JPMorgan believes Japan's June electronic-component production outperformed seasonality, with rigid module substrates and aluminum electrolytic capacitors remaining resilient; its top picks are Ibiden, TDK, Rohm, and one MLCC manufacturer.
- Overall domestic electronic-component production value in US dollars was above seasonality month on month, while semiconductor month-on-month performance was broadly in line with seasonal patterns over the past 20 years.
- Production value and ASPs for rigid module substrates, including ABF substrates and FC-BGA, continued to rise and remained positive even after excluding the impact of yen weakness.
- MLCC production volumes recovered modestly, but US dollar-denominated production-value trends remained broadly flat; the research team places greater emphasis on gradually improving Ministry of Finance export data.
- Memory production value remained sharply higher year on year but declined month on month in June; Si-MOSFET performance was materially stronger than seasonality.
Report interpretation
Overview
Japan's Ministry of Economy, Trade and Industry released June production statistics on August 17, 2026. The report focuses on domestic production volumes, production values, and deviations from seasonality for Japanese electronic components and semiconductors, using these data to update views on subsegments and covered companies.
Core views
Electronic components overall outperformed seasonality, but conditions varied notably across segments: aluminum electrolytic capacitors, connectors, and rigid module substrates were relatively resilient, while ABF substrates/FC-BGA continued to strengthen. MLCC volumes improved but production value stagnated, requiring export data to validate demand recovery. In semiconductors, memory posted strong year-on-year growth but declined month on month; Si-MOSFET stood out among discrete devices, logic ICs underperformed seasonality, and MCUs were broadly in line with seasonality.
Analysis framework
The analysis primarily uses METI monthly production statistics for US dollar-denominated production value, comparing month-on-month performance with historical seasonality and cross-checking against yen-denominated data, volumes, ASPs, and Japan Ministry of Finance MLCC export values.
Methodology notes
Production value, volumes, and subcategory trends
Uses domestic production values and volumes in Japan to assess changes in conditions across electronic-component and semiconductor subcategories.
Comparison against historical seasonal benchmarks
Compares the current month's month-on-month changes with seasonal patterns over roughly the past 20 years to determine whether performance exceeded normal seasonal fluctuations.
Differences between METI production data and Ministry of Finance export data
For MLCCs, the report notes a recent divergence between production value and export value, and considers the gradually rising export data more important.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Ibiden (4062)Beneficiary of favorable conditions in ABF substrates and rigid module substrates
- Strengths
- Rigid module substrate production value and ASPs continue to rise, a signal the report considers positive for Ibiden.
- Weaknesses
- Substrate conditions are highly sensitive to end-market demand and pricing.
- Comparison
- The report lists it as one of its top picks based on April–June results.
- Risks
- Slower ABF/FC-BGA demand, exchange-rate changes, and customer order volatility.
- TDK (6762)Top pick in the electronic-components sector
- Strengths
- Benefits from electronic-component sector performance that is better than seasonality.
- Weaknesses
- The report does not provide separate company-level operating data.
- Comparison
- Listed as a top pick alongside Ibiden and Rohm.
- Risks
- End-demand recovery falling short of expectations and pricing pressure on passive components.
- Rohm (6963)Top pick related to electronic components and power semiconductors
- Strengths
- Discrete devices outperformed seasonality in June, with Si-MOSFETs particularly strong.
- Weaknesses
- Overall US dollar-denominated production value for discrete semiconductors still declined year on year.
- Comparison
- Listed as a top pick alongside Ibiden and TDK.
- Risks
- Power semiconductor demand volatility and delayed recovery in automotive and industrial end markets.
- Murata Manufacturing (6981)Candidate MLCC top pick
- Strengths
- MLCC production volumes are on a modest recovery trajectory, while export data are gradually improving.
- Weaknesses
- US dollar-denominated MLCC production-value trends remain broadly flat, with a divergence between production and trade data.
- Comparison
- One of two alternatives with Taiyo Yuden as the single MLCC company recommended for portfolio allocation.
- Risks
- Improving MLCC demand failing to translate into production-value growth, price competition, and weak end demand.
- Taiyo Yuden (6976)Candidate MLCC top pick
- Strengths
- Could benefit from a modest recovery in MLCC shipment volumes and improved export data.
- Weaknesses
- MLCC production value has yet to establish a clear upward trend.
- Comparison
- One of two alternatives with Murata Manufacturing as the single MLCC company recommended for portfolio allocation.
- Risks
- MLCC pricing, inventory adjustments, and fluctuations in consumer-electronics demand.
Key data
- Passive Component Production Value (US Dollar-Denominated)US$859.4 million, -7.3% YoY, +14.6% MoMJune month-on-month performance was above seasonality, but the overall trend remained broadly stagnant.
- Aluminum Electrolytic Capacitor Production Value (US Dollar-Denominated)US$112.6 million, +0.1% YoY, +7.6% MoMBroadly in line with seasonality, with production value showing a modest recovery trend.
- Rigid Module Substrate Production Value (US Dollar-Denominated)US$180.8 million, +77.8% YoY, +2.8% MoMIncluding ABF substrates and FC-BGA, performance remained strong.
- Logic IC Production Value (US Dollar-Denominated)US$99.3 million, +7.4% YoY, +2.2% MoMMonth-on-month performance was weaker than seasonality.
- Memory Production Value (US Dollar-Denominated)US$1.2408 billion, +145.5% YoY, -31.5% MoMYear-on-year growth remained high, but momentum cooled significantly from May's sharp acceleration.
- Memory ASP (US Dollar-Denominated)+254% YoY, -32% MoMPrices remained strong year on year but declined month on month in June.
Impact & implications
Rising production values and ASPs across the substrate supply chain support earnings expectations for companies related to advanced packaging substrates, with Ibiden a direct beneficiary. Among passive components, the modest recovery in aluminum electrolytic capacitors is favorable for related manufacturers, but MLCCs still require further confirmation from production-value trends and export data. Semiconductor conditions are not expanding across the board; investment positioning should favor subsegments with clear product catalysts and relative cyclical advantages.
Risks
- MLCC production value remains stagnant, with improved export data failing to translate into actual earnings growth.
- A larger month-on-month decline in memory could reflect further cooling in pricing and demand momentum.
- End-market demand for electronic components and semiconductors weakens due to consumer electronics, industrial, and automotive cycles.
- US dollar-denominated production data are affected by yen exchange-rate movements and may differ from operating performance measured in yen.
- Conflict-of-interest disclosures for companies discussed in the report include market making, shareholdings, client relationships, and potential investment-banking compensation.
What to watch
- Whether MLCC volume, production value, and ASPs improve in tandem in subsequent METI data.
- Whether Japan Ministry of Finance MLCC export value can continue to rise and narrow the divergence from METI production value.
- Whether rising production values and ASPs for rigid module substrates, ABF substrates, and FC-BGA can continue.
- Month-on-month changes in memory production value and ASPs, and whether high year-on-year growth can be sustained.
- Changes in performance relative to seasonality for Si-MOSFETs, logic ICs, and MCUs.