Dynamics of the Semiconductor Industry: A Catalyst for Economic Growth

Title: Dynamics of the Semiconductor Industry: A Catalyst for Economic Growth

In the early months of 2024, the Nikkei Stock Average has experienced a rapid upswing, primarily driven by the surge in semiconductor-related stocks such as Laser Tech (6920) and Tokyo Electron (8035). This phenomenon reflects the profound impact of the burgeoning semiconductor industry on the stock market.

The year 2024 witnesses an unprecedented boom in semiconductor demand, attributed to the advancement and widespread application of Generative AI (Artificial Intelligence). This surge in demand extends beyond the semiconductor chips themselves, reaching into the realms of manufacturing equipment and material stocks. Notably, companies like Nomura Micro Science (6254) are reaping the benefits, particularly with their "ultrapure water system" designed for semiconductor cleaning.

Nomura Micro Science's ultrapure water system plays a pivotal role in the semiconductor manufacturing process, specifically in cleaning residual materials and chemicals from wafers during circuit formation. The demand for high-purity water is imperative, considering that even minute particles left on the delicate circuits can lead to semiconductor malfunctions.

While a brief dip in stock prices occurred in mid-January due to news regarding the domestic production of ultrapure water systems in South Korea, the overall trajectory has been a remarkable threefold increase compared to the opening price of 3995 yen at the start of 2023.

Looking ahead, Nomura Micro Science's President, Makoto Uchida, shared insights into the business environment, prospects, and the company's strategic focus in an interview. With semiconductor manufacturers uncertain about the extent of the surge in demand in 2024, there is a collective belief, including that of Nomura Micro Science, that the industry is on the brink of a significant transformation.

Amidst robust semiconductor demand, the company unveiled a new medium-term management plan in November 2023, outlining targets for the fiscal year ending March 2027 – aiming for a revenue of 1010 billion yen and an operating profit of 14.6 billion yen. This ambitious goal represents a 1.4-fold increase compared to the company's projected revenue of 720 billion yen for the fiscal year ending March 2024.

The term "Sustainable Compliance" has become a focal point in Nomura Micro Science's strategy. With the substantial amount of water required for semiconductor cleaning, the company is actively promoting the recycling and purification of used ultrapure water to minimize the overall water footprint. This not only aligns with sustainability goals but also caters to the rising demand for sustainable solutions in the market.

In conclusion, the surge in the semiconductor industry is reshaping the economic landscape, driving stock market growth, and propelling companies like Nomura Micro Science to new heights. As the semiconductor sector continues to evolve, embracing sustainability becomes a key driver for future success, ensuring not only economic growth but also environmental responsibility.