SUMCO Q2 FY2026: Sales Rise 4.7% but Firm Swings to Operating Loss
Revenue
¥215.0B
+4.7%
Operating Profit
¥-6.4B
-185.3%
Net Income
¥-12.9B
-518.6%
Operating Margin
-3.0%
SUMCO reported a 4.7% rise in revenue to ¥215,016 million for the first half of fiscal 2026, but swung to an operating loss of ¥6,363 million, reversing a ¥7,457 million profit a year earlier. Strong AI-driven demand boosted wafer shipments, yet rising manufacturing costs and higher depreciation charges pressured earnings.
Earnings Highlights
Revenue grew to ¥215,016 million (up 4.7% year on year) for the first half of fiscal 2026, but operating profit plunged to a loss of ¥6,363 million (versus a ¥7,457 million profit a year earlier). Ordinary loss was ¥12,179 million (previous year: ¥4,720 million profit), and net loss attributable to parent came to ¥12,895 million (previous year: ¥3,081 million profit), sinking into the red at all profit levels.
The revenue increase was driven mainly by strong shipments of 300mm silicon wafers for advanced logic and memory in AI and data centers. Wafers 200mm and below also recovered moderately. However, cost of sales jumped 14.9% to ¥193,083 million (from ¥168,070 million), as higher depreciation, materials and electricity costs squeezed margins. SG&A expenses fell 5.2% to ¥28,297 million, but not enough to offset the cost surge.
In non-operating items, interest expenses rose to ¥1,844 million (from ¥1,349 million), and depreciation included in "other" non-operating expenses soared to ¥4,116 million (from ¥698 million), widening the ordinary loss. Foreign exchange movements also caused a sharp drop in "other" non-operating income to ¥467 million (from ¥2,413 million).
Business Environment and Wafer Shipment Trends
The semiconductor market saw AI-related demand lead a recovery in volume terms, with industrial applications also turning up. In value terms, memory price increases further boosted growth. Looking at SUMCO's mainstay silicon wafer shipments by diameter, 300mm wafers posted strong growth on sustained demand for advanced logic and DRAM used in AI/data centers. Wafer shipments for 200mm and below also increased, though with mixed patterns across customers and products.
SUMCO is pushing technological development to meet precision and differentiation requirements, aiming to maintain high share in advanced products. It is also working on cost competitiveness through AI-driven productivity improvements. For 200mm and below, a review of production structures is underway to improve efficiency and profitability.
No segment-level revenue or profit figures were disclosed in the earnings report, and detailed breakdowns by wafer diameter are not public. However, it is clear that 300mm growth drove the overall revenue gain, while profitability improvement in 200mm and below is an urgent priority.
Financial Position and Capital Policy
Total assets at the end of the interim period stood at ¥1,136,685 million, up ¥8,719 million from the previous year-end. Cash and deposits rose to ¥89,766 million (from ¥67,296 million), and marketable securities increased to ¥22,000 million (from ¥8,000 million), strengthening liquidity. Fixed assets, meanwhile, fell to ¥623,743 million (from ¥663,425 million) as construction in progress decreased, suggesting a peak in capital spending.
Liabilities increased to ¥495,618 million (from ¥480,181 million), with long-term borrowings at ¥320,836 million and short-term borrowings at ¥46,304 million, keeping interest-bearing debt at a high level. Net assets edged down to ¥641,067 million (from ¥647,785 million), pulling the equity ratio to 50.0% (from 51.3%), mainly on lower retained earnings.
An interim dividend of ¥10 per share was paid, unchanged from a year earlier. The year-end dividend remains undecided, and could be cut depending on future earnings trends.
Q3 Cumulative Forecast and Outlook
SUMCO newly released its forecast for the cumulative first nine months (January–September) of fiscal 2026. It projects revenue of ¥333,000 million (up 9.4% year on year), an operating loss of ¥6,300 million, an ordinary loss of ¥11,100 million, and a net loss of ¥12,800 million. The assumed exchange rate is ¥160 per US dollar, weaker than the prior-year period.
For the July–September quarter alone, expanding 300mm wafer demand and a recovery in NAND are expected to narrow the revenue decline and reduce losses. However, the operating result is still expected to stay in the red.
| Item | Q3 Cumulative Forecast (Jan–Sep 2026) | Actual (Jan–Sep 2025) | Change |
|---|---|---|---|
| Revenue | ¥333,000 million | ¥304,436 million | +9.4% |
| Operating profit (loss) | -¥6,300 million | ¥5,869 million | – |
| Ordinary profit (loss) | -¥11,100 million | ¥2,175 million | – |
| Net profit (loss) | -¥12,800 million | -¥995 million | – |
The company only discloses cumulative forecasts for the subsequent quarter, with no full-year guidance yet. Given the large cumulative loss expected through nine months, a tough full-year outcome is anticipated.
Risks and Challenges
The main risks and challenges facing SUMCO are as follows.
- Geopolitical risks: Rising costs for electricity and materials procurement due to Middle East tensions, with no direct impact on operations yet but potential cost pressure.
- Semiconductor market volatility: Rapid shifts in the business environment, final demand slowdowns, customer inventory adjustments, and forex swings could affect performance.
- Profit structure improvement: While advanced 300mm wafers are strong, 200mm and below remain in recovery. Production restructuring and efficiency gains are urgent; cost cuts are essential to exit the red.
- Financial health: High interest-bearing debt and an equity ratio eroded by profit declines. Early profit recovery is needed to sustain dividends.
Analyst take
SUMCO, the world's largest silicon wafer maker, saw revenue rise on AI-driven demand but profits were wiped out by cost pressures. While demand is a tailwind, the results highlight delays in cost reduction measures and the burden of depreciation. The 200mm and below segment is under restructuring and will take time to contribute. The Q3 cumulative forecast still shows an operating loss, making a full-year profit unlikely. With interest-bearing debt exceeding ¥300 billion, rising interest rates and forex swings pose further risks. The earnings show that higher costs outweighed the AI demand benefit, and without a quick profit recovery, maintaining dividends and supporting the share price will be difficult.