6616.T

• Company & Group Overview

  • Torex Semiconductor is a 30-year old Japanese power semiconductor focused exclusively on power IC, listed on the Tokyo Stock Exchange Prime Market, with 1,038 total group employees. The group consists of two core subsidiaries: fabless power IC developer Torex and domestic foundry Phoenix Semiconductor, a 50+ year old producer of discrete and power devices including SiC semiconductors.
  • Torex's core competitive advantages are industry-leading low quiescent current (hundreds of nanoamperes) enabling 10-year battery life for battery-powered devices, and proprietary coil-integrated DC/DC converter packaging technology with four different product architectures that reduce size and lower noise/heat, which is difficult for competitors to replicate.
  • Phoenix Semiconductor's core competitive advantage is in-house SiC manufacturing capability that supports low-volume, high-mix custom production, enabling it to serve customers that cannot source products from large-volume mass producers, and it holds automotive production quality certifications.

• Product Strategy

  • For Torex: Focus on expanding into medium and high voltage resistant power IC products, targeting AI big data, robotics, high-speed optical communications and industrial equipment segments, while continuing to deepen competitive advantages in low-power, small-form-factor products. It will also pursue module development, technical collaboration, and reference design outreach to OEM customers.
  • For Phoenix: Focus on expanding high-margin power device businesses including SiC, IGBT and silicon-based power devices, moving away from competitive low-margin commodity discrete devices. It will prioritize 2.2kV and 3.3kV high-voltage SiC products to avoid red ocean competition in low-voltage SiC segments.

• Sales & Operations

  • Torex relies on technical sales with on-site FAE support to develop customer-specific solutions, and will implement data-driven sales management to support global expansion aligned with its 70% overseas revenue base.
  • For production: Torex will maintain its fabless model, using Phoenix for stable base production and external foundries for cutting-edge process requirements, while strengthening collaboration with external packaging partners.
  • Phoenix will expand foundry service revenue, implement DX to drive data-driven decision making and improve productivity, and advance sustainability initiatives to reduce environmental impact and improve employee engagement.

• Human Resources Strategy

  • Both entities will implement job rotation to improve cross-functional understanding and enable multi-skilled employees, advance internal DX, and build an engaging work environment. Torex is relocating its headquarters to a single-floor free-address office to improve internal communication, addressing space constraints and communication silos from its previous multi-floor office. Phoenix will focus on recruiting mid-career and foreign workers to address geographic hiring challenges at its Okayama and Kagoshima sites, and train multi-skilled workers to preserve veteran technical knowledge.

• New 5-Year Mid-Term Management Plan (FY2026-FY2030)

  • Vision: Become a semiconductor company that all stakeholders can be proud of, driving sustainable growth and advancing energy-efficient society through CMOS power ICs and semiconductor power devices.
  • Targets: 32 billion yen revenue and 2.5 billion yen operating profit by FY2028; 36 billion yen revenue and 4.5 billion yen operating profit by FY2030; achieve double-digit ROE by 2029 and maintain operating profit margin above 10%.
  • Dividend policy: Maintain a minimum 20% consolidated payout ratio and 3% DOE, and has maintained a stable 56 yen per share dividend for 3 consecutive years.

• For full year FY2026 (ending March 2026): Management revised full-year revenue downward from 25.5 billion yen to 24.5 billion yen, due to slower than expected market recovery.
• For full year FY2026 operating profit: Management upwardly revised the forecast from 4 billion yen to 6 billion yen, as H1 operating profit already exceeded 4 billion yen, with the lower full-year forecast vs doubling H1 profit explained by planned office relocation costs to be recognized in H2.
• The new mid-term management plan targets achievable growth: the 30+ billion yen revenue target has been previously hit in 2022 and 2023, with management targeting to exceed previous peak performance over the 5-year plan period.

The group has two core business segments: 1. Torex Semiconductor (analog power IC fabless segment): In H1 FY2026, it achieved 4.9 billion yen in revenue, a slight recovery from 4.817 billion yen in the prior year period, with growth led by the industrial equipment and medical device segments. It has maintained flat performance amid industry downturn post 2022. Around 70% of its cost of goods sold relies on Phoenix Seimiconductor, and ~70% of its revenue comes from overseas markets. 2. Phoenix Semiconductor (foundry segment focusing on discrete devices and power devices): In H1 FY2026, its revenue decreased slightly due to a downturn in the North American market, but it began showing a recovery trend in Q2. It recorded higher operating profit than Torex in H1 FY2026. 10-15% of its revenue comes from Torex, with the remaining 85-90% from third-party customers, and ~70% of its revenue is from overseas markets. Overall consolidated H1 FY2026 results: Revenue was 11.879 billion yen, down 5.1% YoY; Operating profit was 414 million yen, up 23.1% YoY; Net profit attributable to parent shareholders was 336 million yen; Overseas revenue accounted for 70.6% of total consolidated revenue.

• Overall semiconductor market demand has not recovered to previous peak levels, and no single high-growth segment has emerged to drive group revenue growth after the resolution of industry inventory adjustment issues.
• Regional market headwinds: Japanese consumer electronics demand remains weak, European demand is suppressed by ongoing geopolitical conflict, the North American market remains volatile, and China's push for domestic semiconductor self-sufficiency creates market access challenges for Japanese firms.
• Intense competition: Low-voltage SiC segments are already experiencing red ocean competition and pricing pressure, and commodity discrete devices face intense price competition.
• Geographic hiring challenges: Phoenix's Okayama and Kagoshima production sites face difficulty hiring new graduate employees, risking long-term technical knowledge transfer.

Q: What synergies exist between the Torex power IC business and the Phoenix foundry business? / A: The largest synergies come from direct, close communication between the two teams, allowing Torex to request custom CMOS analog process development from Phoenix. Torex's global sales network also gives Phoenix better visibility into overall market demand trends that it would not capture as a pure foundry with limited customer-facing market access. Both teams share resources and collaborate on new product development directly as part of the same group.

Q: What is the benefit of owning Phoenix as an in-house foundry as a fabless company? / A: First, it guarantees production capacity: during the 2021 semiconductor shortage, the company struggled to secure production slots from external foundries, which highlighted the value of having in-house flexible capacity. Second, developing low-power analog semiconductors requires extensive fine-tuning of process parameters, which external foundries are unwilling to do for low-volume orders. As an in-house subsidiary, Phoenix can accommodate these custom requests, which is critical for Torex's product development.

Q: Which end market does the company expect to deliver the most growth over the next 3-5 years? / A: The company is prioritizing the industrial equipment sector, especially the fast-growing humanoid robotics segment. Humanoid robots require many small power ICs for sensor operation, creating growing demand for the company's core small low-power products. Both Torex and Phoenix serve this segment, with Torex providing power ICs for industrial sensors and Phoenix providing required power devices.

Q: What caused the sales and profit downturn in FY2024 and FY2025? / A: In FY2024, Torex recorded large inventory valuation losses that led to an operating loss. In FY2025, Phoenix experienced large sales declines that could not cover fixed costs, also leading to an operating loss. The root cause was that distributors and intermediate customers held large excess inventory after the 2021 semiconductor boom, and it took an extended period to digest this inventory, which delayed new orders to the company. Management stated that the inventory adjustment is now largely complete.

Q: How are the two Phoenix factories in Okayama and Kagoshima segmented? / A: The Kagoshima factory has newer equipment that supports finer microfabrication processes, while the Okayama factory has older legacy equipment that is fully depreciated, making it suitable for stable, mature production. Generally, Okayama focuses on discrete devices and Kagoshima focuses on newer power semiconductor products, though product allocation is not strictly limited to this split.