JPMorgan maintains Overweight on Rohm and raises the target price from ¥3,900 to ¥8,000

Overview

This report is JPMorgan’s company research and rating revision on Rohm Semiconductor (6963.T). The core conclusion is to maintain an Overweight rating and raise the target price to ¥8,000. The upgrade rationale includes improved supply-demand in analog and discrete semiconductors, Si-MOSFET demand recovery supported by AI servers and industrial machinery revival, upward revision of earnings forecasts, and a significant increase in the valuation of Rohm’s Toshiba equity holdings driven by higher Kioxia valuation.

Core views

The report argues that although Rohm is not a Si-MOSFET leader, it has strengths in small-signal and low-voltage transistor segments and has begun to benefit from rising demand for 80-100V Si-MOSFETs. These products are used in AI server IBC and PSUs, 48V automotive systems, industrial equipment power supplies, home-appliance inverters, and power tools, among others. JPMorgan expects Rohm’s profitability to improve from 2Q onward as capacity utilization recovers and gold-price peak effects fade, and views FY2027 operating profit as potentially exceeding the previous cycle high of ¥92.3bn.

Analysis framework

The report combines EPS/operating-profit forecast upgrades, industry supply-demand assessment, revaluation of holding assets, and ROIC valuation. The target price comprises two parts: a standalone Rohm value of ¥3,400 per share based on FY2028 forecasts under an ROIC framework, and after-tax value of Rohm’s Toshiba stake of ¥4,600 per share. Toshiba valuation is in turn influenced by the value of its roughly 16% stake in Kioxia Holdings.

Methodology notes

• Valuation methodsROIC Model

  EV/IC = ROIC/WACC

  Used to estimate Rohm standalone value. The report uses FY2028 forecasts, zero-growth assumptions, Rf 2.57%, Rp 5.15%, beta 1.0, and WACC 6.8% to derive Rohm standalone value of about ¥3,400 per share.

• Valuation methodsSum-of-Parts Valuation

  Sum of operating value and equity stake value

  The ¥8,000 target price is obtained from Rohm standalone value of ¥3,400 per share plus after-tax Toshiba stake value of ¥4,600 per share.

• Industry AnalysisSupply-Demand Cycle Analysis

  Tightening supply-demand in analog and discrete semiconductors

  The report tracks demand recovery in AI servers, industrial machinery, and automotive 48V systems as drivers of momentum for Si-MOSFET and Analog LSI profitability.

• Scenario AnalysisUpside Integration Scenario

  Integration of Rohm and Toshiba semiconductors

  If Toshiba semiconductors integration proceeds and fixed cost is reduced, the report argues consolidated operating profit could be close to ¥200bn in FY2028.

Asset mapping & comparison

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

• Rohm Semiconductor (6963.T)

  Primary coverage target

  Strengths

  Benefits from improved analog and discrete semiconductor supply-demand, Si-MOSFET demand growth, recovery in capacity utilization, and rising Toshiba stake value.

  Weaknesses

  Not a Si-MOSFET leader, and 1Q earnings remain suppressed due to inventory adjustment effects.

  Comparison

  FY2027 operating profit forecast is already above the prior cycle peak of ¥92.3bn and significantly above company guidance and market consensus.

  Risks

  Delayed semiconductor cycle recovery, yen appreciation, delayed restructuring, Toshiba share decline, and weakening AI cycle.

• Toshiba semiconductor business

  Potential integration target and source of stake value

  Strengths

  If integration with Rohm proceeds smoothly, the report argues that combined revenue and operating profit have significant upside potential.

  Weaknesses

  Acquisition pricing may rise as the market recovers, and integration details still need to be clarified.

  Comparison

  The report estimates Toshiba semiconductor FY2026 revenue of about ¥420-440bn and operating profit of about ¥20-30bn.

  Risks

  Integration pace falls behind, fixed-cost reductions not realized, or financing costs rise.

• Kioxia Holdings (285A.T)

  Indirectly influences Rohm valuation through Toshiba stake

  Strengths

  JPMorgan uses a Kioxia target price of ¥155,000 to estimate the value of Toshiba’s Kioxia shares held, which lifts Rohm’s Toshiba stake value.

  Weaknesses

  Rohm’s exposure to Kioxia is indirect, and value transmission depends on Toshiba ownership structure and market valuation.

  Comparison

  The report states Toshiba holds about 16% of Kioxia, corresponding to about ¥13.5 trillion in value.

  Risks

  A decline in Kioxia’s share price would weaken the revaluation of Toshiba and Rohm stake values.

• Si-MOSFET and Analog/Discrete Semiconductors

  Main earnings driver

  Strengths

  Demand for AI servers, 48V automotive systems, industrial equipment power supplies, home-appliance inverters, and power tools is driving tighter supply-demand.

  Weaknesses

  Whether supply-demand improvement persists still depends on the AI and industrial demand cycles.

  Comparison

  The report says top Si-MOSFET suppliers began seeing supply tightness from Jan-Mar 2026 to Apr-Jun 2026, and while Rohm ranks around fourth or fifth, it has started to benefit.

  Risks

  AI server demand slows, industrial machinery recovery is delayed, or competing supply increases.

Key data

• Target Price¥8,000Raised from the prior target price of ¥3,900, with target horizon moved from Dec 2026 to Dec 2027.
• Current Price¥5,211The report cites the price date as 2 Jul 2026.
• FY2027 Operating Profit Forecast¥93.8 billionAbove JPMorgan’s prior forecast of ¥72.5bn and above the Bloomberg consensus of ¥60.1bn.
• FY2026 Operating Profit Forecast¥62.8 billionAbove JPMorgan’s prior forecast of ¥45.0bn, company guidance of ¥30.0bn, and Bloomberg consensus of ¥38.1bn.
• FY2028 Operating Profit Forecast¥120.1 billionForecast is newly added, assuming exchange rate of £155/USD.
• Rohm Standalone Valuation¥3,400/shareBased on the ROIC model and FY2028 forecast.
• After-Tax Toshiba Stake Value¥4,600/shareThe report estimates Rohm owns nearly 15% of Toshiba, with after-tax value of about ¥1.9 trillion.
• Kioxia Valuation AssumptionTarget price ¥155,000, market value about ¥85 trillionToshiba is assumed to hold a 16% stake in Kioxia; this part is a key source of the rise in Toshiba equity value.
• Upside Scenario for Rohm and Toshiba IntegrationFY2028 operating profit around ¥180-190bn, about ¥200bn after integrationThis scenario depends on continued tightness in semiconductor supply-demand and fixed-cost reductions.

Impact & implications

The investment implication is that Rohm’s stock drivers are no longer only standalone cycle recovery but also revaluation of Toshiba/Kioxia stake assets and potential business integration. If AI server and industrial machinery demand continues to support Si-MOSFET supply-demand tightness, earnings forecasts may continue to be revised upward; if the integration path for Toshiba semiconductors becomes clear, valuation could gain additional upside catalysts.

Risks

• Delay in restructuring or business integration.
• Decline in Toshiba share price or Kioxia valuation.
• Semiconductor cycle recovery is slower than expected.
• AI server demand cycle weakens.
• Yen appreciation pressures earnings and valuation.
• Higher acquisition price for Toshiba semiconductor business or integration synergies below expectations.

What to watch

• Whether tightness in analog and discrete semiconductor supply-demand, especially Si-MOSFET, persists.
• The pace of Rohm’s capacity utilization and operating profit recovery after 2Q.
• Whether FY2027 operating profit approaches or exceeds the ¥93.8bn forecast.
• Progress of Toshiba semiconductor business integration, financing arrangements, and remaining room for fixed-cost cuts.
• Kioxia Holdings share price and its transmission to Toshiba stake value.
• Yen exchange rate, gold-price movements, and their impact on Rohm costs and margins.
• Whether the ¥200bn convertible bonds are converted early and how this affects capital structure.