Strong AI Demand Fails to Stop SUMCO Losses

According to financial results released on May 12, Japanese semiconductor silicon wafer manufacturer SUMCO reported a third consecutive quarterly loss for the first quarter of 2026, with earnings falling below market expectations. Combined with weak guidance for the second quarter, the company’s stock price plunged on May 13, at one point hitting the daily limit-down level during morning trading before closing more than 7% lower at the Tokyo market.

The company reported consolidated revenue of JPY 101.4 billion for the January–March 2026 period, down 1.0% year-over-year. Operating loss reached JPY 5.273 billion, while net loss attributable to shareholders widened to JPY 8.469 billion. In the same period last year, SUMCO posted an operating profit of JPY 5.9 billion and net profit of JPY 3.047 billion, highlighting a significant deterioration in profitability.

SUMCO’s latest earnings report reflects a sharply divided demand landscape in the semiconductor silicon wafer market. Demand for advanced silicon wafers used in AI processors, high-performance logic chips, and DRAM for data centers remains strong, continuing to support the company’s advanced wafer business.

However, demand for wafers used in conventional semiconductor applications remains weak due to ongoing customer inventory adjustments. Shipment volumes for 8-inch and smaller silicon wafers continued to stay at low levels, becoming a major factor weighing on the company’s overall financial performance.

The company stated that pricing for both 12-inch and 8-inch semiconductor silicon wafers remained stable under long-term contract agreements, with no significant price fluctuations reported during the quarter.

Despite the quarterly losses, industry observers noted that SUMCO has made progress in the advanced process wafer market. The company has already begun providing sample wafers for customer verification targeting semiconductor manufacturing processes below the 3nm node. If mass production of these high-end wafers ramps up successfully, it could improve the company’s product mix and profitability over the long term.

Looking ahead to the second quarter of 2026, SUMCO forecast continued losses despite expected revenue growth. The company projects consolidated revenue to rise 8.8% year-over-year to JPY 112 billion. However, it also expects an operating loss of JPY 2.5 billion and a net loss of approximately JPY 7 billion, marking a potential fourth consecutive quarterly loss.

SUMCO expects demand for AI-related advanced semiconductor products to remain solid in the second quarter, driven by continued investment in artificial intelligence infrastructure and data center expansion. At the same time, recovery in conventional semiconductor applications is expected to remain slow due to ongoing inventory corrections and memory market shortages.

For the 8-inch and smaller wafer segment, the company noted that although some products are beginning to show signs of recovery, the broader market environment remains weak. Meanwhile, demand for 12-inch wafers used in NAND Flash production is expected to improve.

From a long-term perspective, SUMCO remains optimistic about demand growth for 12-inch silicon wafers used in advanced logic chips and DRAM products, aligning with broader industry trends linked to AI expansion and high-performance computing development.

SUMCO also remains closely connected with Taiwan Speciality Silicon Wafer Technology, in which it holds approximately a 40% stake as the largest shareholder. The two companies maintain close production collaboration in the 12-inch silicon wafer sector.