"It Sticks Firmly and Is Indispensable": Share Price Jumps 58% in Six Months... How a Toilet Company Became an AI Beneficiary Stock [Tech Talk]

Toto’s century-long legacy in Japan now includes advanced semiconductor components
Electrostatic chucks: ceramic etching-process devices
Rising as core equipment in 3D NAND flash manufacturing

Japanese Western-style toilet manufacturer Toto, which has a 100-year history, has drawn attention after being cited as a beneficiary stock of the memory semiconductor super cycle. Its share price has jumped 58% over the past six months, and its operating profit has improved by more than 20% over the past two years. Why is a toilet company benefiting from a semiconductor boom?

A 100-year-old Japanese toilet maker also called an "AI beneficiary stock"

Bathroom Western-style toilet. The photo is not related to any specific wording in the article. Pixabay

According to the British financial outlet the Financial Times (FT) on the 17th (local time), activist investor and hedge fund Palestra Capital sent a letter to Toto's board of directors last week, calling on the company to "strengthen its ceramics division, which occupies a key position in the semiconductor supply chain." Palestra Capital stressed that Toto is an "undervalued and overlooked AI beneficiary stock."

Toto was founded in 1917 in Fukuoka, Japan, as a manufacturer of Western-style toilets and bathtubs. It specializes in producing the white, vessel-shaped toilets and bathtubs commonly seen in bathrooms. The raw material for these products is ceramics. However, ceramics are not used only in bathrooms. In advanced semiconductor manufacturing processes, ceramics also play an important role.

Electrostatic chucks made from toilet raw materials emerge as a core of semiconductor manufacturing

Electrostatic chucks manufactured by Toto. They secure semiconductor wafers firmly to the surface using electrostatic force. Toto

According to Bloomberg, bathtubs and toilets account for only 60% of Toto's total corporate operating profit. The remaining 40% comes from the semiconductor industry. Since the 1980s, Toto has been manufacturing a ceramic component called an electrostatic chuck and supplying it to semiconductor companies.

An electrostatic chuck is a device that fixes semiconductor wafers (substrates) using electrostatic force. It is a flat, disk-shaped ceramic device, and, as the name suggests, the semiconductor wafer sticks firmly to the electrostatic chuck.

This function is particularly useful when performing the recently spotlighted "cryogenic etching" process. Cryogenic etching is a process in which plasma gas is emitted in an ultra-low-temperature environment below -100 degrees, drilling microscopic holes into the wafer. During this process, the plasma swirls and strikes the substrate; if the wafer moves even slightly from the impact, the process may fail.

If electrostatic chucks are made from materials other than ceramics, the ultra-low-temperature environment can cause the material itself to deteriorate or weaken the electrostatic force. Drawing on more than a century of craftsmanship and technical expertise in shaping ceramic vessels, Toto has produced highly reliable electrostatic chucks.

A semiconductor industry that mobilizes every possible technology if it helps

The latest NAND flash is built by stacking memory cells vertically. The photo shows a PC solid-state drive (SSD) integrating Samsung Electronics' 2nd-generation three-dimensional (3D) NAND flash. Photo by Samsung Electronics

Cryogenic etching using electrostatic chucks is also important for memory semiconductors, which have recently entered a "super cycle." It is especially critical in the production of NAND flash (NAND).

Recently, NAND has been maximizing capacity by stacking memory cells vertically into a three-dimensional (3D) structure. To complete this structure, deep holes must be drilled between memory cells to insert electrodes for data transmission and reception. Only by stabilizing cryogenic etching technology can manufacturers achieve more advanced products and stable yield rates.

The semiconductor industry, often described as the pinnacle of manufacturing, carefully selects and deploys only the best technologies and components from a wide range of sectors. Even toilets, which at first glance seem to have nothing to do with semiconductors, can thus hold a key to leading-edge semiconductor processes.