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Japan\u2019s largest toilet maker is an \u201cundervalued and overlooked\u201d AI play, according to a UK-based activist investor.<\/p>\n
Palliser Capital sent a letter to the board of Toto last week exhorting it to make more of its advanced ceramics segment, saying it holds a crucial position in the semiconductor supply chain. The segment generates 40 per cent of Toto\u2019s operating profit.<\/p>\n
Ubiquitous in Japan and now famous across the world, Toto is best known for its heated toilet seats and \u201cWashlet\u201d bidet features. But the manufacturer \u201chas quietly evolved from a traditional domestic sanitary ware champion into a rising powerhouse in advanced ceramics for semiconductor manufacturing\u201d, Palliser said.<\/p>\n
It described Toto<\/a> as \u201cthe most undervalued and overlooked AI memory beneficiary\u201d because the company also makes so-called electrostatic chucks, which are used to manufacture Nand memory chips.\u00a0<\/p>\n Prices for memory chips have soared over the past few months because of massive demand from AI-focused companies.<\/p>\n Toto\u2019s chuck technology uses ceramics designed to remain stable at very low temperatures, helping hold silicon wafers firmly during chip production. That makes it relevant to cryogenic etching, which is expected to grow as memory chips become more layered and complex.<\/p>\n The company has been making electrostatic chucks since the 1980s using what it has learnt about ceramics during toilet manufacturing, but only in the past few years have they started to become big business.<\/p>\n