Japan's JSR slashes profit forecast on chip recovery weakness

Japan’s JSR slashes profit forecast on chip recovery weakness

November 7, 2023

By Sam Nussey and Miho Uranaka

TOKYO (Reuters) – Japanese chip materials maker JSR Corp on Monday slashed its operating profit forecast for the current financial year by 62%, citing a weak recovery in demand for semiconductors and a slowdown in the biotech market.

JSR, which has agreed to be bought by a government-backed fund as part of a plan to drive industry restructuring, now sees a profit of 16 billion yen ($107 million) in the year ending March 2024, an 84% fall compared to the same year-ago period.

Investors are debating the recovery path for the chip industry which has been hit by a slowdown in demand for electronics such as smartphones and PCs.

Leading chipmakers such as TSMC and Samsung Electronics have pointed to a boost from investment in artificial intelligence next year.

“We had projected an upturn in the second half of the year and as we’ve highlighted here we’re no longer expecting that upturn,” JSR CEO Eric Johnson told a news conference.

“We do believe that we have hit the bottom,” he said.

Japan's JSR slashes profit forecast on chip recovery weakness — JSR Corp.’s bioscience and informatics R&D center in Kawasaki, Japan, on Monday, June 26, 2023. JSR, the largest maker of a compound essential to all chipmaking, surged by its daily limit after a report the government-backed Japan Investment Corp. may buy out the company for roughly ¥1 trillion ($7 billion). Photographer: Akio Kon/Bloomberg

Operating profit was 3.4 billion yen in the second quarter, following a loss of 6.1 billion yen three months earlier.

A leading maker of photoresists used in chip making, JSR said sales for cutting edge extreme ultraviolet (EUV) lithography grew 15% year-on-year in the April-September period.

JSR’s shares are trading below the offer price from Japan Investment Corp, which is overseen by the trade ministry, closing 7% below the price on Monday.

“We have good confidence in the actions that we’re taking (and) we feel that this is an exceptional opportunity for all of our stakeholders,” Johnson said.

($1 = 149.5200 yen)