Murata Manufacturing Co., Ltd.
Q3 Earnings Release Conference for the Fiscal Year Ending March 2026
February 2, 2026
Event Summary
[Company Name]
Murata Manufacturing Co., Ltd.
[Company ID]
6981-QCODE
[Event Language]
JPN
[Event Type]
Earnings Announcement
[Event Name]
Q3 Earnings Release Conference for the Fiscal Year Ending March 2026
[Fiscal Period]
FY2026 Q3
[Date]
February 2, 2026
[Time]
15:30 – 16:35
(Total: 65 minutes, Presentation: 26 minutes, Q&A: 39 minutes)
[Venue]
Webcast
[Number of Speakers]
3
Norio Nakajima
Masanori Minamide
Nagato Omori
[Analyst Names]*
Daiki Takayama
Shoji Sato
Fumihide Goto
Shingo Hirata
Manabu Akizuki
President, Representative Director
Executive Deputy President, Representative
Director
Executive Vice President, Ceramic Capacitor
Business Unit
Goldman Sachs
Morgan Stanley MUFG Securities
Mizuho Securities
UBS Securities
Nomura Securities
1
Presentation
Moderator: We will now commence the Murata Manufacturing Co., Ltd. earnings release conference for Q3
of FY2025.
I would like to introduce today’s speakers. Norio Nakajima, President, Representative Director.
Nakajima: Thank you.
Moderator: Masanori Minamide, Executive Deputy President, Representative Director.
Minamide: Thank you.
Moderator: Nagato Omori, Executive Vice President, Ceramic Capacitor Business Unit.
Omori: Thank you.
Moderator: Today, President Nakajima will first present the highlights and topics of the financial results, and
then Mr. Minamide will give an overview of the financial results and the business performance of the
Company. As soon as the explanation is completed, there will be time for questions and answers. The material
is available on our website in the investor relations section under IR library. The presentation material can
also be downloaded from the timely disclosure information viewing service.
Now, President Nakajima, please proceed.
2
Nakajima: Thank you very much for taking time out of your busy schedule to attend our earnings presentation
today. I would like to start off by explaining some of the highlights of Q3.
As a result of Q3, sales revenue was JPY467.5 billion. Sales of capacitors for servers were strong, resulting in
a 4.3% increase in sales over the same period last year.
Meanwhile, operating profit was JPY37.9 billion. One-time expenses of approximately JPY50 billion, including
JPY43.8 billion impairment of goodwill of the business related to SAW filter products, were recorded. I will
explain this later on. This halved operating profit. Excluding these one-time expenses, operating profit would
be JPY87.7 billion.
We have also revised our full-year forecasts. Revenue forecast is JPY1.8 trillion. The operating profit forecast
was revised downward by JPY10 billion from the October forecast to JPY270 billion due to the significant
impact of impairment losses.
3
I would like to explain the goodwill impairment loss, as its impact on this fiscal year’s financial results is very
significant.
Based on the calculation of cash flows for the entire SAW filter business, we performed an impairment test
for goodwill incurred at the time of the Resonant acquisition. As a result, the entire amount of goodwill at the
time of acquisition, JPY43.8 billion, was impaired. On the other hand, based on our assessment, the fixed
asset’s recoverable amount exceeds its carrying value.
4
I would like to talk about how our assumptions at the time of the acquisition have gone awry.
First, let me tell you about our aims at the time of the acquisition. The acquisition was completed in March
2022. The acquisition price at that time was JPY35 billion, which, when converted to the exchange rate at that
time, was the amount I mentioned earlier.
Purpose of acquisition. See the two-axis graph in the middle. The vertical y-axis is the difficulty or complexity
and the horizontal x-axis is the frequency. We knew that our ceramic LC, SAW, TC-SAW, and I.H.P. SAW filters
would not be able to handle the new cellular frequencies of Wi-Fi7 and FR3 that would be used in the future,
so we acquired XBAR technology to handle frequencies above 3 gigahertz.
Many of our competitors have BAW filter technology shown in the middle. There has been competition in the
BAW filter industry, and the level of technology has improved greatly, and I feel that one of the changes in
the environment compared to when we first acquired that company is that there are more competitors for
our XBAR.
5
However, there are two main reasons. The SAW filter business I mentioned earlier, which was our main
business, is facing an extremely tough competitive environment for conventional frequencies that have been
used for a long time, due to the rise of competition from Greater China. This led to very poor profitability of
the SAW filters themselves, which was one of the reasons for the impairment.
The other thing I mentioned a little earlier is that the original plan to use the full band of the newly generated
Wi-Fi7 wireless network using frequencies above 3 gigahertz and the new FR3 frequency for 5.5G and 6G has
been delayed a bit. The new frequency FR3 will be used experimentally starting in 2027 but will not be fully
mass-produced until 2030 or later. These changes in outlook have also led to the impairment.
6
In the future, the highest priority for high-frequency devices and modules, including high-frequency filters, is
to gain market share for modules used in high-end smartphones. This will greatly affect the business of highfrequency modules and the filters used in them, so we would like to work on this first.
The battery and power supply businesses have been able to grow steadily in 2025. So, we want to be well
prepared for growth in 2026 and 2027.
7
Minamide: I will explain the details.
See page nine.
Nakajima mentioned earlier the comparison of Q3 FY2025 results to the same period last year. As a
supplement, I would like to explain the difference from the previous quarter.
Net sales were down 3.9% and operating profit was down 63% due to the significant impact of the impairment
mentioned earlier. Foreign exchange effects were positive JPY15.0 billion and JPY7.5 billion on net sales and
operating profit, respectively.
The details of the profit/loss analysis for Q3 will be explained later with graphs, along with the cumulative
totals for Q1 through Q3.
8
Page 10 shows revenue, orders, and order backlog.
Orders received in Q3 totaled JPY500.7 billion, a significant increase from Q2. Sales decreased slightly, partly
due to seasonal factors. As a result, the order backlog was JPY336.1 billion, a JPY33.3 billion increase compared
to the end of the previous quarter.
The BB ratio is 1.07 overall and 1.12 for capacitors alone.
9
Page 11 shows revenue by business segment.
Although revenue from the high-frequency device and communications module business declined
significantly from the same period of the previous year, overall revenue increased.
Due to the seasonal factors, revenue from the high-frequency device and communications module business
declined significantly from the previous quarter. I will explain this along with profit/loss on page 12.
10
First, the results of the component business.
For the first nine months, revenue from capacitors was up 10.1% YoY, and revenue from inductors and EMI
filters was up 9.6%. For each, revenue for servers increased. Revenue from sales of inductors and EMI
suppression filters also increased for mobility and smartphone applications.
Operating profit was JPY234.0 billion in the current period, compared to JPY219.3 billion in the same period
last year. Thus, the segment achieved an increase in revenue and operating profit.
Operating profit margin declined slightly from the same period of the previous year. I will explain this.
In the same period of the previous year, there was an insurance income of about JPY7.0 billion. On the other
hand, in addition to the impairment loss on SAW filters that was explained earlier, an impairment loss of about
JPY1.0 billion was actually incurred on inductors and EMI filters, which is recorded in this segment. In the first
nine months of the current fiscal year, the impact of this change has been felt.
11
The next page is about the devices and modules business.
Revenue was down 12% in the high-frequency device and communications module business and down 3.8%
in the battery and power supply business. Although impairment losses on fixed assets were recorded in MEMS
sensors in the previous fiscal year, the functional device business was relatively strong this period. Revenue
increased for mobility, resulting in an overall increase of 7.5%.
Operating profit decreased by JPY26.1 billion from JPY18.0 billion in the same period last year, due mainly to
the impairment loss.
This also includes impairment outside of the SAW filter. We have been trying to improve our portfolio of
connectivity modules, and I believe we have achieved a certain degree of success. We reevaluated our future
cash flow plan and recorded an impairment of about JPY2.0 billion. This also had the effect of reducing
operating profit.
12
See page 14.
As for revenues by application, revenue mainly for communication was down significantly from the same
period last year and from the previous quarter. The breakdown is as I mentioned earlier, so I will not go into
detail.
13
See page 15. This section describes the breakdown of changes in operating profit.
First, let me explain the significant decrease in operating profit compared to Q2.
With regard to capacity utilization, production went from JPY482.0 billion to JPY459.0 billion in the quarter
under review, resulting in a production loss. The peak season was included in Q2, which had a significant
impact. Also affecting this fiscal year was the fact that the production of orders for communication modules
and plastic multilayer boards was considerably skewed toward Q2.
Foreign exchange rates were a positive factor compared to the previous quarter.
Semi-variable and other fixed costs increased slightly. This includes JPY1.5 billion for environmental measures,
which is shown at the bottom of the list of major one-time revenues and expenses. This contributed negatively
to profit. The JPY1.5 billion allowance for environmental measures expenses is not the result of the need for
any additional environmental measures, but rather the result of re-estimating future measures costs since a
very effective soil remediation method has been found.
The product mix and others were a negative factor of JPY46.9 billion. The breakdown is as shown in the box.
14
I will explain the breakdown of changes in operating profit for the first nine months on page 16.
Operating profit was JPY203.0 billion in the third period under review, compared to JPY234.2 billion in the
same period last year.
The production increase was higher in the period under review, due in part to the relatively well-digested
inventory in the same period of the previous year. Lower selling prices were a negative factor, as was foreign
exchange, in this comparison.
Semi-variable and fixed costs include increased semi-variable costs due to higher output, as well as higher IT
and labor costs. Despite efforts to control fixed costs, the result was as shown compared to the same period
of the previous year.
The product mix and others were a negative factor of JPY51.1 billion. This is also explained in the box and will
not be discussed in detail. In addition to the factors noted here, the impact of rising raw material costs in
various businesses is also reflected here.
15
Page 17 shows inventories.
As written, total inventories increased by JPY12.5 billion from the previous quarter. On the other hand,
excluding the effect of foreign exchange rates, inventories decreased by about JPY1.0 billion. When we
announced our Q2 results in October, we said that we wanted to accumulate about JPY20.0 billion in
inventories for the full year. However, for the full year, revenue and production were almost in line with each
other, and inventories did not build up much. Inventory will begin to digest somewhat in Q4.
16
Page 18 shows the status of cash flows.
Cash flow from operating activities decreased by JPY41.8 billion from the previous year, due to a decrease in
inventories in FY2024.
As for cash flows from financing activities, JPY80.0 billion of treasury stock was repurchased in the previous
fiscal year and JPY100.0 billion in the current fiscal year. In the last fiscal year, there was an additional
JPY50 .0billion in bond redemptions, which is reflected in the difference.
17
I will skip one page and explain the earnings forecast on page 20.
Overall, as Nakajima mentioned earlier. We revised upward our revenue forecast by JPY60.0 billion and
downward our operating profit forecast by JPY10.0 billion.
18
I will explain the premise and the details of that. See page 21.
First, the smartphone set volume forecast was revised upward by 2% due to strong exports of high-end model,
as well as low-end models mainly to Greater China.
For automobiles, the volume forecast was revised upward by 1% due to stronger-than-expected production
volume, also mainly for China. The PC volume forecast was also revised upward by 2% due to replacement
demand.
The AI server performed very well in Q3 as well, but we did not update our forecast at this time because the
renewal is semi-annual. However, favorable market conditions continue.
19
Page 22 is about perceptions of the business environment. I will explain the changes from the assumptions as
of October on the right.
Overall, set volumes were as Nakajima mentioned earlier. I also mentioned earlier that components for AI
data centers are doing well.
Although there are concerns about the impact of rising memory prices, we have not yet received any negative
information at this time, and we believe that the impact will be limited in FY2025. On the other hand, we will
closely monitor the impact on 2026 based on supply, demand, and price trends.
Product prices are also in line with previous assumptions. Q4 assumes an exchange rate of JPY150.
Production was also relatively strong in Q3 following Q2.
However, inventories have not yet caught up with demand in some markets, and inventories have not yet
been built up, so the current forecast is lower than the previous forecast.
We believe that expenses are under control in a planned manner.
20
See page 23.
I would like to explain the revision of the sales forecast by business segment from the previous forecast. By
business segment, as shown in the second column from the right, there is not much difference in trend from
the previous forecast.
21
Page 24 shows the revenue forecast by application. Not much change here either. Sales projections are better
than expected in computer-related business. Compared to H1, revenue from the communication business is
expected to decrease, partly due to seasonal factors.
22
Page 25 is the breakdown of changes in operating profit. Let me first explain the changes from the October
forecast for FY2025 to the current forecast.
I have said most of specifics up to the analysis of the factors that affect earnings in the first nine months of
the year, and there is not much to add. As for the product mix and others, the impact of impairment is
explained in the box as before.
The transfer of the micro primary battery business, which is scheduled to be completed in Q4, is expected to
generate a gain of JPY5.0 billion, which was included in the previous earnings forecast.
23
See page 26.
Here is a comparison of results for FY2024 and the revised forecast for FY2025 for the full year. The trend here
is also almost the same as that explained for cumulative Q3 earnings, so I will not go into details.
Although semi-variable and fixed costs are a major negative factor, they are under control relative to the plan,
and we believe the costs in the Group as a whole is in control.
24
The next page shows the assumptions underlying the forecast. Depreciation and amortization expenses are
expected to be JPY171.0 billion, the same as the previous forecast, and R&D expenses are expected to be
JPY155.0 billion, a slight increase from the previous forecast of JPY153.0 billion.
Capital expenditure is expected to be JPY250.0 billion, a decrease of JPY10.0 billion from the previous forecast
of JPY260 billion. Actually, there is a slight variance in estimates, or a slight delay, in the acquisition of buildings
and land. Overall, however, there has been no significant change from our previous assumptions about the
capacity expansion.
25
Page 28 shows the quarterly financial results.
26
There is no change in the shareholder return policy on page 29 from the plan announced in October. That’s
all from me. Thank you very much.
27
Question & Answer
Moderator [M]: That’s all from the Company. We will now move on to the question-and-answer session.
Our first question comes from Mr. Takayama of Goldman Sachs.
Takayama [Q]: I have three questions. Please tell us about MLCC’s Q3 and Q4 utilization rates and MLCC’s
actual inventory buildup and plans for January through March. Also, you mentioned last time that the price
trend seems to have calmed down a bit, but what is the current situation after the annual negotiations?
Also, Q3 operating profit for components seem a bit small, even excluding one-time factors. Please provide
additional information on what factors contributed to this.
Omori [A]: We are proceeding with 90% to 95% capacity utilization in Q3 and Q4 on a capacity utilization basis,
as previously forecast. In this context, orders have been falling so far in Q4 due to seasonal factors, but we
want to build up our inventory, and if possible, we would like to ensure a capacity utilization rate close to 95%.
Regarding inventory levels, we said at the previous quarter’s briefing that we wanted to build them up
somehow. Certain orders were coming in, and as a result of our efforts to fulfill them, inventory did not build
up much.
We assume that orders will remain strong in the next fiscal year and beyond, and as I mentioned earlier, we
hope to build up a certain amount of inventory in Q4 while increasing capacity utilization.
Regarding price trends, there are still high demands for price reductions, both in automobiles and elsewhere.
We have been responding to each negotiation for the next semi-annual period to a certain extent, but we
expect this to slow down in FY2026.
Minamide [A]: I will explain the comparison between Q2 and Q3 of the component business. As you
mentioned, the operating profit margin for the component business in Q3 was 25.5%, compared to 28.8% in
Q2, a decrease amid flat sales and a weakening yen trend. I am aware that you are asking about that.
The reason for this is that the impact of the elimination of about JPY6.0 billion of unrealized income in the
component business in Q3 is significant, even excluding the JPY1.0 billion or so impairment loss in inductors
and EMI that I mentioned earlier. In Q3, the operation also increased margins, which in turn increased the
elimination of unrealized income. As a result, I believe profitability declined from Q2 to Q3.
Takayama [Q]: Let me ask about inventories. Is it difficult to build up inventory because of the strong inquiries
for AI servers and other products and the load to produce them? What will be the actual degree of that
accumulation? Will you manage to build up inventory in Q4 and will operating profit from component be less
bad than usual in Q4?
Omori [A]: The main inventory we are considering building up is for AI servers. We are increasing this
utilization rate, but because of the high production load, we are balancing this with the current increase in
orders.
In Q4, orders for general consumer orders usually drop. We plan to use that portion to increase our inventory
for AI servers.
28
Takayama [Q]: The second question is also mainly about parts, MLCC. Earlier, there was talk of keeping a close
eye on smartphones and PCs due to the impact of memory in the coming year. On the other hand, you are
now getting orders for AI servers, etc. that you can’t make them all. With such a considerable difference, with
regard to market conditions in the coming period, will the weakness of smartphones and PCs have enough of
an impact to change the whole situation?
A bit more to the point, the price was raised due to the assumption that costs will increase for EVs or cars in
2017 and 2018. I think it is time to have such a strategy when considering company-wide performance. As
such, please tell us if this would disrupt the overall supply and demand, and then how you would make it
profitable.
Nakajima [A]: In general, nowadays, we hear about the shortage of HBM, DRAM, or normal memory in data
centers. But in my conversations with actual customers, there has never been any mention of actual results
falling short of earnings forecasts.
Even if there were some impacts from PCs and smartphones, the smartphones that would probably be
affected would be mainly low-end models. Therefore, we do not expect our demand to be significantly
affected.
On the other hand, demand for data centers, especially for AI servers, continues to grow. So, I think it is a very
big issue how much we can produce them in 2026 and how much we can respond to customers’ demands.
We have not discussed raising prices at this time, but I believe we should consider it depending on market
conditions.
Takayama [Q]: Right now, you are just focusing on delivery. If you are able to make and deliver some but are
still busy, for example, in the middle or latter half of this year, I don’t know, but that could happen.
Nakajima [A]: Yes, I assume so.
Takayama [Q]: Finally, I would like to ask about the performance of the entire company. Although there were
some transitory factors, such numbers are still in place for this fiscal year. A closer look reveals that operating
profit is in the range of JPY200 billion to JPY300 billion for four consecutive years starting in FY2022. There
were some negative factors with batteries at the time, though. The peak before that was JPY420 billion. In
thinking about the next fiscal year and the fiscal year after the next, from the outside looking in, the next fiscal
year will be really important, the year in which you should record certain figures.
The capacitor business is in good shape, and all businesses other than capacitors are expected to do well or
very well in the next fiscal year. I would like to ask about your determination to make this a year of good
figures, or how you are positioning the next year.
Nakajima [A]: Well, we have a mid-term plan for 2025 to 2027, and we believe that the target for FY2027 is a
must. However, there are increases and decreases when viewed on a single year basis. For example, revenue
from high-frequency modules, which used to be concentrated in the fall, will be scattered in the fall and spring,
and a significant portion of revenue will be recorded in FY2026. We are just now calculating the budget, and
the direction for the single year 2026 needs to be scrutinized.
However, targeting 2027, we can improve the profitability of SAW filters by, for example, raising the market
share of high-frequency modules one more notch. In 2026, as we have talked about before, the scale of power
supply for data centers will be very large, so it is important to create a system that can make it work. Our
policy is to generate solid results in 2027.
29
Takayama [Q]: Perhaps an option such as a capacitor price increase, in terms of a buffer, seems like a good
thing to consider.
Nakajima [A]: Yes, thank you very much.
Takayama [M]: Thank you very much. That’s all from me.
Moderator [M]: Our next question comes from Mr. Sato of Morgan Stanley MUFG Securities.
Sato [Q]: I have two questions. The first point is about high-frequency modules for smartphones in North
America. What changes have occurred for three months? You mentioned earlier that sales for smartphones
in North America for the next fiscal year will be spread between H1 and H2. Does this suggest that there will
not be much increase in the next single year?
The other is about XBAR. Have you started shipping single items? Also, please let us know when this will be
incorporated into your module.
Nakajima [A]: This is only the first year since the sales policy for smartphones in North America has changed
to some extent, so we have little grasp of the status and timing of customer purchases. But simply put, sales
will be divided into fall and spring, so the demand for us will also be divided. In such a situation, we have a
rough idea of which is more important, since the finishing time is fixed.
I do not believe that FY2026 alone will lead to much growth.
We have already shipped XBAR for Wi-Fi 7 for tablets. Based on these achievements, I believe the level of
manufacturing has risen considerably. We would like to consider this for 2027 or 2028 so that it can somehow
be included in the module.
Sato [Q]: I understand that this has already been installed on tablets, but do you expect that this will be
installed on smartphones as well?
Nakajima [A]: Yes, that will begin as well.
Sato [Q]: The next question is about the increase in memory prices, as mentioned by Mr. Takayama. What
impact is the increase in memory prices likely to have on the total demand for MLCCs? Also, please tell us if
any of your module products are concerned about or have been affected by the rising memory prices and
difficulties in procurement.
Nakajima [A]: Omori will talk about MLCC. Some of our modules have memories, but the number is limited.
So, we don’t think there will be a very large direct impact.
Omori [A]: The current market conditions of memory are not directly affecting MLCC at this time. Regarding
the future, we feel that the magnitude of the impact on smartphones, PCs, or automobiles is likely to vary
from customer to customer.
In the past, we have had customers who were sensitive to such things and those who were not. So, I think
there may be a difference in the impact of customers who already have a limited supply of memory and those
who do not. However, we do not see such concerns among our large customers at this time. Therefore, even
if this were to happen, the impact is expected to be very limited.
Sato [Q]: In other words, do you feel that supply and demand for MLCC will continue to be so tight in FY2026
that production capacity will be insufficient or supply may not be available in time?
30
Omori [A]: Yes.
Sato [M]: Thank you very much.
Moderator [M]: Our next question comes from Mr. Goto of Mizuho Securities.
Goto [Q]: I Let me ask you two questions.
Regarding the full-year sales plan we have received, according to the plan by application, the mobility segment
and the computers segment are expected to be strong, and sales are also expected to increase in the industry
and others segment. Given the seasonality, I got the impression that it is strong. Could you please tell us about
your thoughts on the sales forecast for Q4 for each of these application fields?
Nakajima [A]: Regarding mobility applications, there is a big market for automated driving and EVs in China,
and sensors for software-defined vehicles or SDVs, which are forming a market there, are contributing to the
performance. I don’t think Q4 will be much different from that trend.
For now, revenue in the computers segment will be mainly from MLCCs for data centers. We are seeing very
strong demand for this as well for Q4 or next year.
Goto [Q]: What about the industry and others segment?
Minamide [A]: In the industrial and others segment, we expect sales to be roughly flat in Q3 and Q4.
Goto [Q]: Is there likely to be any particular change?
Minamide [A]: I don’t think there will be much change.
Goto [Q]: Second, you have already mentioned memory shock, but what other risk factors do you anticipate?
What do you see as the changes in the environment or risk factors, such as the recent rise in metal prices, the
various policy changes in China, and the tightening of export controls on rare earths and other resources?
Nakajima [A]: We are putting a lot of effort into that, especially in the purchasing department. We are holding
inventories while at the same time working in duplicating the supply chain. We deal with each customer
individually, so we can’t go into detail, but we do try to work out a way to do it without causing any
inconvenience while conversing with the customer.
Some product groups have been particularly affected by the rising prices of metals. We are also now
considering whether to reflect this in future pricing policies.
Goto [Q]: Do you have any specifics on the aggregate impact of metal prices?
Nakajima [A]: Something speculative is moving the price quite a bit on a daily basis, so we would like to
proceed with a discussion on whether the price should reflect this by looking at it more calmly.
Sato [M]: Understood. Thank you very much.
Moderator [M]: Our next question comes from Mr. Hirata of UBS Securities.
Hirata [Q]: Let me ask you two questions.
First, you mentioned that MLCC’s orders this quarter were very strong. The BB ratio is 1.12, which is about a
30% increase over the previous year. I understand that the market for AI servers is strong, but could you
31
please explain in more detail, for example, the BB ratio by application and what applications are driving the
YoY growth?
On top of that, the concept of capacity for the coming year. Traditionally your company has been going at
cruising speed of 10%, is there any change there? Also, as Mr. Omori explained earlier, you mentioned that
you are going to use the capacity of consumer applications for AI. Please also tell us how much flexibility you
have in that capacity.
Omori [A]: First of all, we honestly cannot explain the orders for this fiscal year only for AI. I personally believe
that we probably need to take a closer look at what is in this, and where all of MLCC’s industry capabilities are
headed.
First of all, we recognize that the demand for AI servers is very vigorous and that support is much more
important than price in this area. In this context, we believe that it is necessary to have a certain interpretation
of where capacitor manufacturers, including our company, are allocating their resources.
In this context, our policy is to capture the volume zone as well. It is our understanding that some orders in
that volume zone are also rising. We believe that this has boosted our overall MLCC a bit.
We are not considering a sudden and large increase in production capacity for the next fiscal year. As in the
past, we will continue to increase supply capacity at a constant rate. At the same time, we are not simply
increasing the number of facilities and personnel, but are now working to expand our overall capacity,
including rationalization.
As for consumer and AI server applications, AI servers are a more reliable area among consumer products,
and the number of stacked sheets or size is large, so I think it is possible to allocate that part to a certain
extent. We are currently adjusting the contents of the operation.
Hirata [Q]: Second, could you tell us about the current profit/loss status of the SAW filter businesses, for
which impairment losses were recorded in the current fiscal year, as well as the prospects for the next fiscal
year? I don’t think the goodwill of Resonant will have much of an impact on the bottom line, and you
mentioned that HF will not grow much in the coming year. Could you tell us how the business of this SAW
filter will improve with what curve?
Minamide [A]: Profit/loss for SAW Filter alone is not disclosed. I would like to summarize and explain a little
bit about the situation in the subsegment of the devices and modules business, which includes communication
modules and SAW filters. As for the outlook for the current fiscal year, we believe that the overall segment
will be profitable, excluding impairment losses. Although the situation with the SAW filter is not so good right
now. We estimate that the business as a whole will be able to recover around FY2027 and will be able to earn
relatively stable revenues again around FY2028.
Nakajima [A]: Regarding the business of SAW filters alone, the Chinese market is still significant at the single
product level. I believe we will be able to obtain some business in the frequency bands that are difficult for
local Chinese companies. We will achieve a certain level of results in high-frequency modules for high-end
smartphones this fiscal year and are able to slightly increase our market share. Through rising the market
share a notch, I believe the profitability in 2027 which Minamide just mentioned will be fully achievable.
As for XBAR, as I mentioned today, the time for higher and higher frequencies will be around 2030. So, I think
it will be around the time that XBAR will be profitable on its own. However, I think that the first target for the
high-frequency filter business as a whole is to become profitable by 2027.
Hirata [M]: I understand very well. Thank you very much.
32
Moderator [M]: Mr. Akizuki of Nomura Securities, please proceed.
Akizuki [Q]: Let me ask about figures.
Will the JPY5 billion gain on the sale of primary batteries be recorded in Q4? Also, your Q3 SG&A expenses
are up quite a bit QoQ, what is the reason for this? Likewise, other operating revenues were probably
JPY5 .0billion in Q3, please explain this.
Minamide [A]: Regarding SG&A expenses, as a special factor, we recorded about JPY1.5 billion for
environmental measures. In addition, more IT costs and other items were recorded in Q3 than in Q2. Overall,
we recognize that there was not a significant increase in any fixed costs in Q3.
As for other operating revenues, foreign exchange gains were mainly recorded in Q3.
Akizuki [Q]: Second, let me ask how you can increase the profitability of the component from here. In the
fiscal year ended March 2023, profitability was at least in the low 30% range. Right now, 25% to 26% of these
sales seem a bit low considering your company’s capabilities. I believe there were many factors, such as falling
prices and rising labor costs. What measures will be prioritized in raising margins for the next fiscal year and
the year after that?
Omori [A]: You pointed out that the expected profit margin is a little low at this point. In our company, we
have been increasing capacity by 10% every year. As to whether or not we are making full use of this area,
our policy has been to expand a certain level of capacity from a long-term perspective.
We believe that the years 2026, 2027, and 2028 are the time to finally recover the fixed costs that we have
invested so far. So far, we have had a situation where there is a little surplus, but we can use that part to our
advantage. As revenues for AI servers and others grow a bit more, I believe that our fixed costs will thin out
and we will be able to convert that into profit.
Second, as I mentioned earlier, we are considering the use of DX and AI in various operations for streamlining
manufacturing processes to improve productivity and operational efficiency.
We estimate that the profit margin will increase a little more as these two points contribute to the future.
Akizuki [Q]: You are basically thinking that there is a bit of a mismatch in capacity and that if you optimize it,
you will get back to the profit margins of the good times.
Omori [A]: Yes. In addition, orders for AI servers, which are currently strong, are extremely difficult to produce,
and we expect to see improvements in this area as well.
Akizuki [Q]: Third, congratulations on winning the order for the vertical power feed module. I have two
questions for the future. The first is about XBAR. The vertical power feed module should only be used by one
company now. How does introduction expand from there and what kind of business opportunities does it
provide for your company?
This is also a rather glamorous industry and an area that many prominent companies are targeting. In what
areas do Murata Manufacturing’s strengths come into play? It could be the height, the conversion efficiency
of the module, or many other things. Can you tell us about that as well?
Nakajima [A]: Circuits have many features, but I think our competitors are also working on that part of the
circuit. I feel that what is most appreciated now is the technology for making modules smaller and thinner,
which has been cultivated in the communication module business.
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What will this look like in the future? In the operation of moving the GPU and TPU chips closer and closer to
the electrical circuits, IVR and other technologies with built-in components will become necessary. I believe
we have an advantage in this area as well.
Also, not many people know this, but this is a high-efficiency power supply. This is a vertically powered module
that takes 800 volts input, down converts it to about 50 volts, and DCDC converts it to run GPUs and TPUs at
1 volt or less. The ability to do a variety of technologies in such a one-stop mechanism is also recognized as a
value.
It is not easy to expand your business. Now we are getting more and more demands from customers, and we
will respond to them. In addition, vertical power feeds are finally being demanded by other companies, and
the amount of support and coverage for customers is increasing.
Akizuki [Q]: Now you have it on the bottom of the printed circuit board, and it goes on the underside of the
package, or parts inside the package . If the distance between GPU or TPU and modules are not placed close
together, it will be heated. Does this mean that you are keeping up with that roadmap well? Your company is
also a capacitor house, and you have very important components such as silicon capacitors, for example. So,
I think the combination with that would be a sufficient strength.
Nakajima [A]: I heard that power module maker in Taiwan, which is in the same industry, or rather leading
the way, has an inductor company as a subsidiary and has also introduced a base with its own built-in cores.
As you mentioned, we have MLCCs and silicon caps, which make it easy to create a built-in substrate in a very
thin package. We would like to show a little advantage there.
Akizuki [M]: Understood. Thank you very much.
Moderator [M]: The end-time has come, so we will now conclude the Murata Manufacturing Co., Ltd. earnings
release conference for Q3 of FY2025.
Thank you very much for joining us today.
[END]
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