Micronics Japan: Strong HBM Demand, Probe Card Lead Time Remains at 5 Months

Overview

This research report is Morgan Stanley's meeting minutes on Micronics Japan (6871.T) at the 2026 Japan Summit. The report notes that the company's probe card demand remains strong, particularly HBM-related demand, which is the current core driver of profits. Despite active capacity expansion, lead times remain tight. Meanwhile, product mix optimization is significantly improving operating margins.

Core views

Demand and Capacity: The company is optimistic about probe card demand, with capacity expected to increase by approximately ¥2 billion per quarter. However, due to growing demand, lead times remain at 5 months despite active expansion, making delivery capability a key factor in securing orders. Profitability and Product Mix: The company expects significant improvement in F12/26 operating margins (1Q 27%, 2Q 29.3%, 3Q 34.7%), mainly driven by changes in the product mix. While specific product profitability is not disclosed, new design products and high-volume production projects typically have higher margins than repeat products and small batches. HBM Business Driver: Over half of DRAM probe card sales come from HBM. HBM4e sales are gradually ramping up, while increasing HBM4 demand is the main engine driving current profit growth. Strategic Cooperation and Capex: In May 2025, the company signed a strategic cooperation agreement with HTSI to obtain technical support for cantilever probe cards and strengthen its business foundation in Taiwan. Additionally, under a capital investment plan extending to 2028, the company will install equipment in all production-capable regions in Japan and Korea.

Analysis framework

The institution primarily tracks the company's capacity expansion progress, lead time changes, and product mix structure to assess its fundamentals. In the semiconductor equipment industry, lead time is a core indicator of supply-demand tightness and pricing power. At the same time, analyzing the proportion of high-value-added products (e.g., HBM probe cards, new design products) in total revenue helps forecast trends in margin improvement. For valuation, the institution uses peer comparison, referencing the average forward P/E of semiconductor production equipment (SPE) and related companies to set the target price.

Methodology notes

• Valuation MethodPE/PEG valuation

  Forward P/E Peer Benchmark Valuation

  The institution uses a target P/E of 23x multiplied by F12/27 EPS forecasts to calculate the target price. This target P/E references the average forward P/E of FY26 for companies classified as semiconductor production equipment (SPE) and related firms. This is a typical relative valuation method, aligning the target's reasonable pricing with the valuation center of comparable peers in the industry.

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Lead Time as a Supply-Demand Indicator

  In the semiconductor equipment and components industry, lead time directly reflects the supply-demand landscape. The report notes that despite active capacity expansion, lead times remain at 5 months, demonstrating extremely strong downstream demand and the company's robust order acquisition capability.

Asset mapping & comparison

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

• Micronics Japan (6871.T)

  Core Beneficiary: HBM demand surge drives probe card demand, capacity expansion and tight lead times, product mix optimization improves margins.

  Strengths

  Strong competitiveness in HBM probe cards, high margins for new design products; cooperation with HTSI enhances Taiwan business layout.

  Weaknesses

  Capacity expansion remains constrained, facing competitive pressure from peers also expanding.

  Risks

  Slowdown in memory bit growth or loss of technological edge; mature testing processes shortening test times; intensified price competition; oversupply concerns.

Key data

• Capacity Expansion PaceApproximately ¥2 billion per quarterExpected increase in probe card capacity
• Current Lead Time5 monthsRemains unchanged despite active expansion
• F12/26 1Q Operating Margin27%Projected to be driven by product mix optimization
• F12/26 2Q Operating Margin29.3%Sequential improvement
• F12/26 3Q Operating Margin34.7%Margins rise quarter by quarter
• HBM Share of DRAM Probe Card SalesOver 50%HBM4 demand is the current main profit driver

Impact & implications

The report believes that the surge in demand for advanced memory testing, such as HBM, has made probe cards a bottleneck in the semiconductor supply chain. Micronics Japan's comprehensive capacity deployment in Japan and Korea, along with deepened cooperation with HTSI to strengthen its Taiwan supply chain, positions it to secure high-value-added orders during the transition from HBM4 to future HBM4e, supporting structural margin improvement.

Risks

• Slowdown in memory bit growth or loss of technological leadership.
• Mature testing processes reducing test times, thereby decreasing probe card consumption.
• Intensified industry price competition or oversupply concerns.
• Delays in non-memory probe card demand or weak TE division performance.

What to watch

• Progress in HBM4e and subsequent generation product sales ramp.
• Installation and release pace of new capacity in Japan and Korea.
• Expansion of non-memory probe card sales.