Glass and Electronic Ceramics Q2 FY2026: AI demand widens profit gap

Four of the five companies posted revenue growth, but profit trends varied.

• Semiconductor and generative AI demand supported NGK Insulators, Niterra and MARUWA. Demand for manufacturing equipment and electronic components played to their strengths.
• A recovery in automotive-related markets also helped. AGC benefited from improving demand for architectural and automotive glass, while automotive-related business was firm at NGK Insulators and Niterra.
• Costs and investment burdens affected earnings. At NEG, equipment conversions, maintenance and start-up costs weighed on operating profit.
• One-off profit factors differed among the companies. Securities valuation gains made a major contribution to Niterra's net income, while AGC benefited from the absence of impairment losses recorded a year earlier.

AGC and NEG reported interim results, while the other three companies reported first-quarter results. Revenue and profit rankings should be read with the differences in reporting periods in mind.

NGK Insulators stood out for underlying profit growth. Operating profit rose 37.2% to ¥32.6 billion, the fastest increase among the five, supported by demand for semiconductor-related products and automotive exhaust-gas purification components. Its operating margin was 17.7%.

By contrast, NEG's operating profit fell 31.8% to ¥11.4 billion. Revenue edged up 1.7%, while restructuring and equipment-related costs squeezed earnings. The company also cut its full-year operating-profit forecast to ¥20 billion.

The companies diverged in their ability to turn demand growth into profit. MARUWA had the highest operating margin, at 33%. Its operating profit grew a more modest 5.8%, but its strong profitability stood out.

Results highlighted both growth investment and efforts to reposition businesses.

• AGC benefited from a recovery in architectural and automotive glass demand, price adjustments and improving electronics market conditions. Operating profit rose 19.7% to ¥64.7 billion. Its full-year forecast was unchanged.
• NEG recorded a ¥12.9 billion extraordinary loss related to restructuring at its U.S. subsidiary. It is also converting display production equipment and starting up medical-glass facilities, but costs came first.
• NGK Insulators increased sales of products for semiconductor manufacturing equipment, lifting operating profit 37.2%. The impact of exiting its NAS battery business is also keeping its portfolio under review.
• Niterra reported revenue growth of 19.9% and operating-profit growth of 24.4%. Its net income benefited from ¥99.5 billion in securities valuation gains, which should be distinguished from operating performance.
• MARUWA saw growth in semiconductor demand related to generative AI and products for high-speed communications. Its operating margin was 33%, and it raised its full-year forecast.

Strong demand in growth markets does not guarantee that every company will see earnings rise at the same pace.

• Fluctuations in semiconductor and display markets can change orders and factory utilization.
• Currency movements affect overseas sales and procurement costs. A weaker yen can be a tailwind, but a reversal may put pressure on profits.
• Equipment conversions and new-factory start-ups can bring costs forward and delay returns on investment.
• Glass manufacturing is energy-intensive, leaving companies exposed to higher fuel prices and environmental compliance costs.
• The shift to electric vehicles and changes in product technology could alter demand for existing products and the competitive landscape.
• One-off factors, including valuation gains and the absence of impairment losses, can cause large swings in net income.

AGC had the largest revenue, at ¥1.1006 trillion. But company size and profitability rankings did not match. MARUWA's operating margin was 33% and Niterra's was 20.5%, both well above AGC's 5.9%.

Companies capturing demand for semiconductors and communications are gaining visibility for their profitability. However, Niterra's net income was significantly affected by valuation gains, so rankings by profit growth alone do not show the underlying strength of its core business.

The glass and ceramics industry spans a wide range of products and growth markets. Those interested in semiconductor manufacturing equipment or communications components can look to developments at NGK Insulators and MARUWA. AGC is another option for people seeking exposure to automotive, construction and electronic materials.

During restructuring or equipment start-ups, operational improvement and quality-control skills can be especially important. Look beyond company-wide revenue to see which businesses are growing and what kinds of roles investment may create.