6871.T

Overall Financial Results (Full Year 2025)

• Full year revenue: 70.173 billion yen, up 26.1% year-over-year; operating profit: 16.542 billion yen, up more than 30% year-over-year; ordinary profit: 17.1 billion yen; net income attributable to parent company shareholders: 12.063 billion yen, all profit lines increased by more than 30% year-over-year (more than 1.3x growth).
• Results beat the November 2025 full year guidance: revenue beat guidance by 1.273 billion yen, operating profit beat guidance by 2.742 billion yen, net income beat guidance by 2.863 billion yen.
• The board resolved a 23 yen per share dividend increase to 95 yen per share, which will be submitted to the March 2026 shareholder meeting for approval.
• Q4 2025 results: revenue 19.761 billion yen (up 14.3% quarter-over-quarter, up 18.6% year-over-year); operating profit 5.241 billion yen (up 40.5% quarter-over-quarter, up 33.4% year-over-year).
• All quarters in 2025 achieved an operating profit margin of over 20%, maintaining stable profit generation.

Balance Sheet and Cash Flow

• Total assets at the end of the period: 99.026 billion yen; cash and deposits: 19.305 billion yen, accounting for ~20% of total assets; net assets: 66.052 billion yen; equity ratio: 66.7%, ROE: 20.9%.
• Interest-bearing debt is 6.53 billion yen, with an interest-bearing debt ratio of less than 10%; the company holds an undrawn credit line of 19 billion yen, maintaining a healthy financial position.
• Q4 2025: operating cash flow 6.245 billion yen, investment cash flow -2.83 billion yen, free cash flow +3.415 billion yen. Full year 2025: operating cash flow 12.9 billion yen, investment cash flow -21.7 billion yen, full year free cash flow -8.8 billion yen. Ending cash position is equal to ~3 months of monthly sales.
• Q4 2025 capital expenditure was ~4.6 billion yen, mainly for machinery and equipment. R&D expenditure has continued to increase by 0.1 to 0.2 billion yen quarter-over-quarter.

Medium and Long-Term Business Environment Outlook

• The semiconductor market is expected to continue growing year-over-year from 2025 to 2027. The expansion of generative AI from cloud to local/edge devices will drive growth of edge AI semiconductors, and further expansion of demand for high-performance semiconductors for data centers as AI evolves into agent AI; non-AI memory semiconductors will maintain steady demand, and demand for automotive/industrial semiconductors and logic IC testing will also grow steadily.
• The probe card market is expected to grow 14% year-over-year in 2026, reaching a market size of 3.3 billion USD; the compound annual growth rate of the probe card market during the FV26 mid-term plan period is forecast at 17%, an upward revision of 3 percentage points from the previous forecast. Growth is driven by AI-related semiconductor market expansion, and the evolution and production expansion of HBM will further drive demand growth for DRAM probe cards.
• In 2026, HBM will evolve from HBM4 to HBM4E, and custom HBM will also emerge.

Business Strategy and Mid-Term Plan (FV26) Progress

• Probe Card Business: The company will accelerate production expansion at the newly completed Aomori factory new building to meet strong demand, and promote development of new technologies for next-generation HBM. While the company has traditionally focused on cantilever-type MEMS probe cards, it will increase R&D for other probe designs to adapt to custom HBM and other new products. For non-memory probe cards, the company will focus on its core products MEMS-V and MEMS-SP, strengthen new customer development targeting the recovering automotive and industrial semiconductor markets, and promote R&D for new vertical probe cards for high-performance logic products.
• TE Business: The company will continue to promote strategies to expand sales of the new semiconductor tester Testalio and new wafer prober Excelyze, continue to strengthen R&D and sales for test sockets and RF probes, and strengthen support from overseas bases to expand sales.
• FV26 mid-term plan (2023-2026) progress: Sales and profit are on track to meet the final year targets. The company plans to increase capital expenditure to expand production capacity, and increase R&D expenditure to enhance competitiveness for next-generation devices. Cumulative planned capital expenditure for the full plan period is 56.3 billion yen, which is significantly higher than the previous 48 billion yen target; cumulative planned R&D expenditure is 25 billion yen, an increase of 3 billion yen from the previous target, for a total planned investment of 81.3 billion yen.

• 2026 December Period H1 (January-June) guidance: Revenue of 43.9 billion yen, up 10.779 billion yen year-over-year; operating profit of 12.3 billion yen, up 4.73 billion yen year-over-year; ordinary profit of 11.8 billion yen, up 4.4 billion yen year-over-year; net income attributable to parent company shareholders of 8.2 billion yen, up 3.4 billion yen year-over-year. The assumed exchange rate is 150 yen per USD, with a calculated impact of less than 30 million yen per 1 yen of USD/JPY exchange rate fluctuation.
• 2026 full year capital expenditure is planned at 19 billion yen (9 billion yen in H1, 10 billion yen in H2); full year R&D expenditure is planned at 8.5 billion yen (4.3 billion yen in H1, 4.2 billion yen in H2). Capital investment for the Aomori factory new building will be implemented ahead of schedule.
• The probe card market is expected to grow 14% year-over-year in 2026, and Japan Micronics expects full year 2026 group revenue growth to exceed the 26% year-over-year growth achieved in 2025, meaning revenue will significantly exceed the original FV26 mid-term plan full year target of 80 billion yen. The company expects operating profit margin to exceed the FV26 target of 25%.
• Starting from 2026, order volume and order backlog information will no longer be disclosed, as the company judges short-term fluctuations in this data do not accurately reflect actual business conditions or future outlooks.

1. Probe Card Business (Q4 2025):

• Total Q4 revenue: 19.761 billion yen, with 93% contributed by memory probe cards and 7% contributed by non-memory probe cards.
• Compared to the previous quarter, memory probe card revenue increased by 3.1 billion yen, while non-memory probe card revenue decreased by 0.6 billion yen. Driven by the expanded production capacity of the new Aomori factory building, memory probe card sales (led by DRAM products) hit a new all-time high, and order volume also hit a new quarterly record.
• Segment profit margin reached 34.5%, with segment profit improving significantly quarter-over-quarter due to expanded sales of DRAM probe cards.
• Full year 2025 total company revenue is 70.173 billion yen, and the full year 2026 H1 planned revenue for the probe card business is 43.2 billion yen.

1. TE Business (Q4 2025):

• Q4 2025 reported a segment loss of 403 million yen, with revenue decreasing quarter-over-quarter due to delayed market recovery for semiconductor test sockets.
• Sales remain centered on test socket products. The full year 2026 H1 planned revenue for the TE business is 0.7 billion yen.

• Uncertainty in the global economy remains due to opaque U.S. tariff policy and policy operations, and geopolitical risks are expected to remain severe. There is a risk of renewed escalation of U.S.-China trade and economic friction, which could create instability for global supply chains.
• Tight supply of AI-related advanced memory has created supply constraints for non-AI memory semiconductors.
• Strong demand for probe cards means the company cannot currently fulfill all customer orders by their requested delivery dates, and this situation is expected to continue for some time.

Q: What is the outlook for 2026 full year probe card revenue, and what is the expected profit margin? Based on the stated 26%+ growth target, full year revenue would exceed 86 billion yen — is that the target the company is aiming for, and what profit margin should investors expect?

A: Full year revenue growth is indeed expected to exceed 26%, as stated. While we cannot disclose exact figures, we aim to achieve an operating profit margin above the FV26 mid-term plan target of 25%, and investors can use the published H1 2026 guidance as a reference for assessment.

Q: What is the growth trend for the memory probe card market, and what level of profit margin can we expect going forward, given increasing depreciation expenses? Why has Japan Micronics outperformed the broader market so far?

A: The overall probe card market is expected to grow 14% year-over-year in 2026, and the memory probe card segment is expected to grow faster than that. The non-memory probe card market has a larger overall size, but memory probe cards have a much higher growth rate. We cannot share more detailed figures at this time.

Q: Q4 2025 sales beat guidance significantly, which is attributed to faster-than-planned production capacity expansion. Why was capacity expansion completed ahead of schedule even though reported capital expenditure was below plan? Is the strong Q4 performance also due to normal seasonality? What is the production capacity outlook for Q1 2026 and beyond?

A: We had planned for production equipment malfunction remediation to take up capacity in Q4, but the remediation was completed faster and with lower cost than planned, so that capacity was able to be used for normal production, leading to the higher-than-planned sales. The lower-than-planned reported capital expenditure is only due to timing: some capital expenditure will be recognized in Q1 2026, and actual investment is progressing as planned. The production capacity target for end-2025 is still on track. Starting from Q1 2026, we will accelerate and increase capital expenditure ahead of the original FV26 mid-term plan, so production capacity will continue to increase gradually through Q1 and Q2 2026, which is already reflected in the H1 guidance. Production capacity and sales are expected to grow steadily through the end of 2026.

Q: Will cantilever probes not be able to support HBM4E, and what is the outlook for Japan Micronics maintaining its market share for memory probe cards if the market shifts away from cantilever designs?

A: There are no specific technical issues with supporting HBM4E at this time. As HBM evolves and becomes more customized, pad positions may become randomly arranged, so development of vertical probes is necessary. However, this does not mean the company's existing U-Probe cantilever product will become obsolete immediately, so there is no need for concern about the company's ability to maintain share.

Q: The company is expanding production capacity ahead of schedule, and market demand is growing across multiple applications. Is a supply体制 that can support 100 billion yen in annual probe card sales already in place, and what is the current lead time situation?

A: We cannot share specific capacity figures, but it is almost certain that we will continue to be unable to fulfill all customer orders by their requested delivery dates for the foreseeable future, as demand remains very strong. All probe card manufacturers are working to expand capacity to meet this demand, and Japan Micronics is also accelerating additional capacity expansion to build a supply体制 that can meet all customer orders on schedule. The company currently holds nearly 40% share of the memory probe card market, and we are continuing to invest in capacity to maintain this share and our market position through 2026 and 2027.

Q: What were the drivers of the higher-than-expected Q4 2025 profit margin, after the Q3 production issue that was expected to cost 0.7 to 0.8 billion yen? Does the improved product mix come from increased HBM sales, and has the company implemented any price increases to improve margin?

A: First, production equipment malfunction remediation costs were much lower than originally planned, which is one key factor. Second, we had expected a lower-margin product mix for Q4, but the shift to higher-margin products (not just HBM, but also general DRAM and mobile DRAM outside of HBM) progressed faster than planned, leading to a much better product mix than expected. These two factors are the main drivers of the higher profit margin. We decline to comment on specific pricing actions. As a supplement, operating profit beat the November guidance by 2.7 billion yen, and a portion of that beat came from the reversal of product warranty reserves that were set aside in Q3 for the production issue, amounting to several hundred million yen. But the main driver of the beat is still the improved product mix of high-margin products. The actual full year exchange rate was 149 yen versus the planned 147 yen, but the impact of exchange rate on results was limited.

Q: 2025 full year free cash flow was negative 8.8 billion yen, and the company is planning a large increase in capital expenditure in 2026. How will the company fund this planned capital expenditure, and when do you expect free cash flow to return to positive?

A: It is true that 2025 full year free cash flow was negative 8.8 billion yen, but this is the result of having built up a high cash position at the start of the period in preparation for this large wave of capital expenditure. We have 19 billion yen in undrawn credit facilities to fund the 19 billion yen 2026 planned capital expenditure, and we also expect strong operating cash flow from the H1 2026 28% operating margin guidance. We will use operating cash flow effectively and use credit facilities as needed, and the current financial position is very healthy so this level of capital expenditure is fully manageable. It is hard to give a specific timeline for when free cash flow will turn positive, since we have not published full year 2026 profit guidance, but adding operating profit and depreciation gives a very strong underlying operating cash flow, and H1 2026 alone is expected to generate strong positive operating cash flow.

Q: Will the shift from HBM4 to HBM4E increase heat generation, and will this lead to higher replacement demand for probe cards? Can you share any quantitative estimates?

A: It is true that heat generation increases with the HBM generation shift, similar to the transition from DDR4 to DDR5. Probe cards are replaced with each new memory generation, so we expect a similar level of replacement demand as past generation transitions.

Q: What preparations are needed for the company to adapt to die-level testing?

A: The company will continue to use probe cards to support die-level testing, and no major changes to our product lineup are required.

Q: What is the business progress with customers outside of your two major customers?

A: We assume this question refers to the three major DRAM manufacturers. We currently still have relatively low shipment volume to SK hynix, but our relationship remains good, and we expect shipment volume to increase going forward.

Q: Why did non-memory probe card sales decrease in Q4 2025, what is the 2026 outlook, and what is the progress of customer and application development for non-memory probe cards?

A: Non-memory probe card sales have high quarterly volatility, because we occasionally receive large bulk orders for specific products (even if they are smaller than memory orders). Q3 2025 received one such large order, so Q4 sales declined sequentially from that high base. This volatility is expected to continue in 2026. We are seeing a gradual shift from older vertical probes to our new MEMS-V and MEMS-SP products, and we expect sales of these two new products to grow gradually. The non-memory market is centered on automotive and general industrial products, where our products have strength, so we do not expect a sharp rapid recovery, but product recognition is growing, and evaluation progress is increasing in Europe and China, so 2026 is expected to be a year of steady business development. We are also advancing development of array-type vertical probes beyond our core MEMS-V and MEMS-SP, and we expect to deliver some progress on this development between 2026 and 2027.

Q: Why did the company decide not to renew the advance warning type takeover defense measure?

A: Based on recent market trends and ongoing dialogue with institutional investors, the board resolved to allow the advance warning type takeover defense measure to expire at the end of its term. If a large-scale shareholding acquisition occurs in the future, the company will consider response measures in accordance with applicable laws and regulations including the Financial Instruments and Exchange Act.