SUMCO, a major maker of silicon wafers for semiconductors, announced on November 11, 2026 that it expects a consolidated operating loss of ¥3.3 billion for the fiscal year ending December 2026. Net loss is projected to narrow to ¥3.4 billion from ¥11.7 billion a year earlier. In the July–September quarter, the company posted an operating profit of ¥2.0 billion, beating its own forecast of break-even. Operating margins remain low, however: 1.7% for July–September and a forecast 0.9% for October–December. Meanwhile, SUMCO says that, driven by growing AI-related demand, it is "becoming unable to meet requested volumes" of 300mm wafers. The October–December operating profit forecast of ¥1.0 billion is only about 1% of projected sales of ¥107.0 billion, so whether the tight supply-demand balance can be converted into better earnings will depend heavily on selling prices.
¥2.0 billion operating profit in Q3, but a ¥3.3 billion loss forecast for the full year
SUMCO's July–September 2026 sales were ¥117.5 billion, with an operating profit of ¥2.0 billion. Cumulative sales for January–September rose ¥28.1 billion from a year earlier to ¥332.5 billion, but operating results swung from a ¥5.8 billion profit in the same period last year to a ¥4.3 billion loss. Depreciation rose ¥19.2 billion year on year to ¥99.2 billion, weighing on earnings. For the full year, the company forecasts sales of ¥439.5 billion (up 7.3%), an operating loss of ¥3.3 billion and a net loss of ¥3.4 billion. According to Reuters, the average forecast of 15 analysts compiled by IBES was a net loss of ¥13.3 billion, so the company's guidance implies a smaller loss than the market expected.
The company booked a net profit of ¥5.4 billion for July–September, but extraordinary items had a large effect. It recorded a ¥13.6 billion gain on the partial sale of shares in its Taiwanese consolidated subsidiary FORMOSA SUMCO TECHNOLOGY (FST), while also booking a ¥3.7 billion extraordinary loss tied to ending wafer production at its Miyazaki plant at the end of December 2026. FST became an equity-method affiliate effective September 30, so its sales and operating profit are not included in the October–December forecast. The October–December sales forecast is ¥10.5 billion lower than July–September, but the portion attributable to FST's removal from consolidation has not been disclosed. The impact on operating profit is likewise included in "costs and other items," and no individual figure is available.
Capital spending has also been cut sharply. Capital expenditure (on an acceptance basis) for January–September was ¥29.7 billion, down ¥39.6 billion from ¥69.3 billion in the same period last year. Operating cash flow was ¥77.0 billion and free cash flow was ¥48.1 billion. Interest-bearing debt fell from ¥353.7 billion at the end of 2025 to ¥250.8 billion at the end of September 2026, though FST's removal from consolidation also contributed to that decline. SUMCO's caution about expansion investment is not simply a matter of lacking funds. The company has concluded that investing in added capacity does not make economic sense at current selling prices, so price levels will shape future capacity expansion.
The earnings forecast assumes an exchange rate of ¥160 to the dollar, and SUMCO says each ¥1 move in the rate affects annual operating profit by about ¥1.2 billion. A weaker yen pushes operating profit up, so exchange rates, as well as selling prices, will influence earnings.
A 1% price change roughly equals a quarter's operating profit
The notable feature of SUMCO's earnings structure is its heavy depreciation burden, which leaves operating profit extremely small relative to sales. Operating profit is EBITDA (earnings before interest, taxes, depreciation and amortization) minus the depreciation included in operating expenses. EBITDA for July–September was ¥35.0 billion, but depreciation included in operating expenses reached ¥33.0 billion, leaving operating profit at just ¥2.0 billion.
The October–December forecast has the same structure. EBITDA is ¥32.1 billion and depreciation included in operating expenses is ¥31.1 billion, leaving ¥1.0 billion in operating profit. Although the EBITDA margin holds at 30.0%, depreciation alone accounts for about 29.1% of sales, pulling the operating margin down to 0.9%. Full-year depreciation is expected to reach ¥131.4 billion, up ¥15.8 billion from the previous year.
In a structure like this, small changes in selling prices have a large effect on operating profit. Using the October–December sales forecast of ¥107.0 billion as a base, a 1% change in overall selling prices would affect sales by about ¥1.07 billion, nearly the same as the quarter's operating profit forecast of ¥1.0 billion. If sales volumes and manufacturing costs are unchanged, the price effect flows almost directly into operating profit. By comparison, converting the sensitivity of about ¥1.2 billion in annual operating profit per ¥1 move in the exchange rate into a simple quarterly figure gives about ¥300 million per yen. In other words, a 1% change in selling prices is, by this calculation, equivalent to a yen depreciation of about ¥3.6. This is only a rough estimate that assumes a price revision applies across all sales; actual effects will vary with contract terms and sales mix.
Notably, SUMCO acknowledges tight supply and demand for 300mm wafers without indicating a clear intention to raise prices. In its outlook for October–December, the company says it is "becoming unable to meet requested volumes" of 300mm wafers, while stating it plans to handle additional demand "based on its existing relationships and pricing with customers." It also explained that, given current selling prices and rising costs, new expansion investment is not economically rational, and that even if it decided to invest, expanding capacity would take several years. It therefore expects wafer supply and demand to tighten further. With demand beginning to outstrip supply capacity yet expansion unprofitable at current prices, the importance of price revisions stands out.
At rival Shin-Etsu Chemical, price increases have already begun in some areas. As XenoSpectrum reported on November 2, the company said at its October 27 earnings briefing that it had started raising selling prices in part for supply beyond the volumes set in long-term contracts and for customers without contracts. For existing long-term contracts, however, expiry was described at its July briefing as coming at the earliest at the end of 2027, so it may take time for price revisions to spread across total sales.
Long-term contract constraints and non-price drivers of earnings
Still, a price revision is not necessarily the best choice. Maintaining long-term agreement (LTA) prices has the advantage of securing stable order volumes and plant utilization. SUMCO also said that LTA prices were "protected" in July–September, and as long as existing contract terms hold, price revisions may be limited to additional demand outside the contracts. In that case, the estimate of about ¥1.07 billion from a 1% increase applied to total sales would overstate the actual profit effect. For example, if price increases cover only part of sales, the contribution to operating profit would shrink accordingly.
Operating profit also moves for reasons other than selling prices. Depreciation included in operating expenses is expected to fall by ¥1.9 billion, from ¥33.0 billion in July–September to ¥31.1 billion in October–December. Over the same period, however, EBITDA is also expected to fall ¥2.9 billion, from ¥35.0 billion to ¥32.1 billion, so operating profit shrinks from ¥2.0 billion to ¥1.0 billion. Because this comparison also reflects FST's removal from consolidation, it cannot be concluded that lower depreciation alone is insufficient to sustain profit. Judging actual earnings improvement requires also considering changes in the scope of consolidation, product mix and manufacturing costs.
Even so, with operating profit at such a low level of ¥1.0 billion, the structure in which small price changes strongly affect margins remains. The point is not that SUMCO has decided to raise prices, but that at the current profit level, earnings are extremely sensitive to selling prices. Even if tight supply and demand continue, if long-term contracts limit price revisions, rising demand will not necessarily translate immediately into a large profit increase.
The next piece of evidence will be SUMCO's forecast for the following quarter. The company's policy is to publish only the next quarter's forecast, so attention will be on whether the operating profit forecast exceeds the ¥1.0 billion projected for October–December without any announced price increase or expansion investment decision. If profit improves without confirmed price revisions, factors other than price, such as product mix, cost reductions and utilization rates, may be lifting earnings, though the effect of unannounced price changes cannot be ruled out. Conversely, if price increases outside contracts come to light, checking how widely they apply would make it possible to assess how much they actually contribute to operating profit.
As demand for 300mm wafers strengthens, SUMCO's challenge is whether it can turn tight supply into better earnings and future expansion investment. Going forward, in addition to selling price trends, long-term contract terms and decisions on expansion investment will be important.