Japanese Semiconductor Companies Break No-Debt Rule to Borrow and Invest..."Semiconductor Market to Double"

Kyocera Breaks Founder’s Principles with First Borrowed Management
Backed by Government Support... Companies Also Launch Aggressive Investments

Kyocera Kagoshima Plant Research and Development (R&D) Center. (Photo by Kyocera website)

[Asia Economy Reporter Jeon Jin-young] Kyocera, a major Japanese semiconductor company, announced that it will implement debt financing for semiconductor investments for the first time since its founding. This move is interpreted as a bold investment driven by confidence that the semiconductor market will grow more than twofold in the future.

Amid a positive trend within Japan that the semiconductor industry will continue to grow, active government support is also following. Overseas factories are gradually returning to Japan, and the booming atmosphere in the local semiconductor sector is expected to continue for some time.

◆Kyocera breaks founder’s 'debt-free management' principle and makes aggressive investments

Kazuo Inamori, Honorary Chairman of Kyocera (Asia Economy DB)

On the 28th, Hideo Tanimoto, President of Kyocera, stated in an interview with Nihon Keizai Shimbun (Nikkei) that "From March 2024, over three years, we will increase capital investment and R&D expenses to a total of 1.3 trillion yen (12.4 trillion KRW), of which 70% will be invested in increasing production and developing new products for advanced semiconductor package components."

In particular, Kyocera plans to raise funds through borrowing for the first time since its establishment to finance this investment. The Kyocera Group will secure funds by using its shares in telecommunications company KDDI as collateral for the first time. Nikkei estimates that borrowing could reach up to 1 trillion yen (9.5 trillion KRW).

This marks the first time the Kyocera Group has broken the 'debt-free management' policy upheld since the founder, Honorary Chairman Kazuo Inamori. Until now, Kyocera has been regarded as a financially sound company with an equity ratio exceeding 70%, but this time it is embarking on full-scale investment.

According to Nikkei, Kyocera plans to start stock-backed borrowing by March next year and increase the borrowing amount to up to 500 billion yen by 2026, with consideration to raise it to as much as 1 trillion yen depending on the semiconductor market conditions.

◆"Semiconductor market to double by 2030"... Government support follows

[Image source=Reuters Yonhap News]

President Tanimoto emphasized that the reason for the bold investment is "because the semiconductor-related market is predicted to be twice the current market size by 2030," and that "management has shifted to actively investing in ceramic components and others."

It is also being evaluated that new movements are emerging across the entire Japanese semiconductor market, not just Kyocera. Both the government and companies are putting their lives on the line for industry recovery, and various support measures are following. Japanese Prime Minister Fumio Kishida allocated 1.3 trillion yen (12.4 trillion KRW) for semiconductor-related budgets in the second supplementary budget proposal last month. This will support production bases, securing parts and materials, and overseas R&D cooperation projects in various ways.

Actual effects are also appearing. According to a joint report by KOTRA and the Japan Semiconductor Equipment Association on the 25th, the size of the Japanese semiconductor manufacturing equipment market this year increased by 30.0% compared to the previous year to 1.1834 trillion yen, surpassing the 1 trillion yen market size for the first time.

Moreover, Japanese semiconductor companies that had expanded overseas are returning to their home country, so the booming trend in the local semiconductor sector is expected to continue for the time being. Due to COVID-19 causing Chinese factories to close and the yen depreciation leading to soaring transportation costs, companies are turning back to domestic production. Kyocera also decided to build a new factory in Kyushu, where Taiwan's TSMC is located. According to Nikkei, Kyocera plans to build a factory producing semiconductor components and capacitors in Isahaya City, Nagasaki Prefecture, Kyushu, and open it in 2026.

This content was produced with the assistance of AI translation services.