Slower Recovery for Semiconductors Weighs on Kyocera's Near-Term Profitability

Director

Kazunori Ito

Kyocera is a Japanese conglomerate that manufactures an array of ceramic components and electronic devices. The company has repeatedly made bolt-on acquisitions to prop up tepid organic growth, but with approximately 300 subsidiaries and three major reporting segments, we think Kyocera has been unable to realize meaningful synergies from them. With its hand in so many different businesses, many of which are unrelated to its core business, the firm has been unable to focus its resources on its most profitable segments.

Kyocera built its business by manufacturing ceramic components for the semiconductor industry and has capitalized on the proliferation of electronic content in automobiles, medical devices, and industrial equipment. Kyocera has 80% market share of ceramic packages for semiconductors, which are necessary to protect chips on circuit boards. Similarly, the company’s increasing exposure to industrial end markets, which require customized components with high technical complexity, will afford it higher pricing power in an increasingly competitive environment. However, since its origin, Kyocera has expanded into the telecom and information equipment businesses, where the company faces intense competition from large U.S. and Japanese manufacturers. The information equipment product line is still dominated by monochrome printers, which are subject to intense pricing pressure, but the company’s recent foray into managed print services has been promising.

Overall, we think Kyocera suffers from a lack of vision. Despite its size and customer relationships, the company has been unable to build an economic moat, as the solution business segment and other noncore operations now make up more than 50% of Kyocera’s revenue base and have been a persistent drag on profitability. While we believe Kyocera will continue to generate stable operating margin, we would like to see the firm divest its less profitable equipment segments and concentrate its efforts on components to enable margin expansion.

Business Strategy & Outlook

We believe Kyocera does not have an economic moat. While we recognize the strength of its ceramic package for semiconductors, which has approximately 80% market share and has been the company’s cash cow, this business accounts for only 14% of total revenue. Kyocera’s business is well diversified with three major segments: its core components business and electronic components business segments sell a wide range of electronic components and devices to various applications such as smartphones, automobiles, industrials, and semiconductors; while its solutions business segment sells handsets, copiers, cutting tools and solar panels. However, we assess that some products have very little market share in the competitive environment, struggling with low profitability. Likewise, we observe few synergies between business segments. In summary, we believe that the strength of ceramic components is diluted by the poor performance of undifferentiated products in weak market positions, and so we believe that Kyocera’s returns on invested capital will not exceed its weighted average cost of capital, supporting our no-moat rating.

Kyocera is known as implementing a unique management methodology named Amoeba Management, which divides the organization into smaller groups and requires each member to act as management and maximize group profit. We acknowledge that this philosophy, established by the founder Kazuo Inamori, has been the source of the company’s success, allowing it to achieve better-quality products at a lower cost. On the other hand, we think this philosophy sometimes constraints Kyocera when dynamic action is necessary. For instance, we recognize that Kyocera has been somewhat inflexible in adapting to its changing environment and making drastic decisions regarding restructuring and mergers and acquisitions, and we regard this as the flip side of Amoeba Management.

None

Economic Moat

Kyocera Corp

Revenue

Cost of revenue

Gross profit

Operating expenses

SG&A

Other

Operating income

EBITDA

Net income

Earnings per share

Total assets

Current assets

Cash & equivalents

Receivables

Inventory

Non-current assets

Net PPE

Intangibles

Total liabilities

Current liabilities

Short term debt

Income tax payable

Non-current liabilities

Long-term debt

Total equity

Stockholders equity

Minority interest

Total liabilities & equity

Total debt

Net debt

Book value per share

Cash from operations

Funds from operations

Change in working capital

Cash from investing

Capital expenditure

Purchase/sale of investments

Purchase/sale of business

Other sources

Cash from financing

Change in stock

Change in debt

Cash dividends paid

Cash from other sources

Net change in cash

Free cash flow

Kyocera Corp. engages in the design, development, production, manufacture and sale electronic equipment. It operates through the following segments: Fine Ceramics, Semiconductor Components, Applied Ceramic Products, Electronic Devices, Telecommunications Equipment, Information Equipment and Others. The Fine Ceramics segment provides components for semiconductor processing equipment, flat panel display manufacturing equipment, information and telecommunication, general industrial machinery, sapphire substrates, and automotive. The Semiconductor Components segment caters ceramic packages for crystal and saw devices, ceramic metal oxide semiconductor/charge coupled device image sensor ceramic packages, large scale integration ceramic packages, wireless communication device packages, optical communication device packages and components, and organic multilayer packages. The Applied Ceramic Products segment handles the residential and commercial use solar power generating systems, solar cells and modules, cutting tools, micro drills, medical and dental implants, and jewelry and applied ceramic products. The Electronic Devices segment offers ceramic capacitors, tantalum capacitors, saw devices, radio frequency modules, electromagnetic interference filters, clock oscillators, crystal units, ceramic resonators, optical low pass filters, connectors, thermal print heads, inkjet print heads, amorphous silicon photoreceptor drums, liquid crystal displays, and touch panel. The Telecommunications Equipment segment markets mobile phones, and personal handy phone system handsets and base stations. The Information Equipment segment distributes monochrome and color printers, multifunctional products, wide format systems, document solutions, application software, and supplies. The Others segment administers information systems and telecommunication services, engineering business, management consulting business, epoxy molding compounds for semiconductor encapsulation, electrical insulators, flexible printed circuit sheet materials, synthetic resin molded parts, realty development business, and light emitting diode lighting systems. The company was founded by Kazuo Inamori on April 1, 1959 and is headquartered in Kyoto, Japan.

This prestigious award marks the fifth consecutive year that TTI Asia has recognized KYOCERA AVX for faithfully fulfilling critical quality performance metrics designed to build stronger partnerships, improve quality performance, and provide excellent customer service. FOUNTAIN INN, S.C.

KYOCERA AVX EARNED A PLATINUM 2022 TTI ASIA SUPPLIER EXCELLENCE AWARD

SAN DIEGO--(BUSINESS WIRE)-- #ceramicknives--INNOVATIONwhite™ ceramic knives by KYOCERA enhance grip ability and cutting control. They're available now on Indiegogo.

INNOVATIONwhite™ Ceramic Knives by KYOCERA Enhance Grip Ability and Cutting Control, Available Now on Indiegogo

The new 9296-11X Series STRIPT™ vertical poke-home through-board contacts offer valuable cost and space savings, support design flexibility, and reliably terminate 12–18AWG solid and stranded wire. Ideal applications include machine controls, building controls, LED lighting, and home appliances.

KYOCERA AVX Expands User-Friendly Poke-Home Connectivity Portfolio With New 9296-11X Series Single Contacts

FORT WORTH, Texas--(BUSINESS WIRE)-- #display--TTI, Inc., a leading specialty distributor of electronic components, is now an authorized distributor of Kyocera LCD display products in North America, the companies announced today. Kyocera offers a variety of Thin-Film-Transistor (TFT) and Memory-in-Pixel (MIP) displays. The companies will focus on expansion opportunities in the industrial, medical and eMobility markets. Kyocera's industrial TFT displays feature exceptionally high contrast and color saturat.

Kyocera Signs Distributor TTI to Provide LCD Displays in Industrial, Medical and eMobility Markets

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation announced plans to build a new Center for Development at its Shiga Yasu Campus in Japan.

Kyocera to Construct New Development Center at Shiga Yasu Campus in Japan

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation announced its consolidated financial results for the three months ended June 30, 2023.

KYOCERA Announces Consolidated Financial Results for Three Months Ended June 30, 2023

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation (President: Hideo Tanimoto) today introduced its 6893 Series connectors for flexible printed circuit board (FPC) and flexible flat cable (FFC), featuring 0.5mm-pitch one-action locking, with samples available for shipping June 29, 2023. This new series offers a 2x improvement in foreign matter removal performance compared to our previous products, helping to prevent the FPC/FFC deposits that can cause contact failure after insertion. Product Ov.

Kyocera Introduces One-Action-Lock FPC/FFC Connectors

SAN DIEGO--(BUSINESS WIRE)-- #Android--Kyocera maximizes business mobile productivity with ultra-rugged DuraForce PRO 3 smartphone.

Kyocera Maximizes Business Mobile Productivity With Ultra-rugged DuraForce PRO 3 Smartphone

SAN DIEGO--(BUSINESS WIRE)-- #Android--Kyocera, a global leader in mobile rugged devices, announced today that it was validated by Google as an Android Enterprise Gold Partner. Kyocera reached Gold status by achieving or exceeding advanced requirements in Partner Expertise, Product Excellence and Performance. Android Enterprise Gold status is Kyocera's latest qualification, in addition to its Play Protect certification (formerly GMS or Google Mobile Services) for Android malware protection. Kyocera has be.

Kyocera is a Validated Android Enterprise Gold Partner

BWX Technologies

Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of Kyocera (KYOCY) and BWX Technologies (BWXT). But which of these two stocks presents investors with the better value opportunity right now?

KYOCY vs. BWXT: Which Stock Is the Better Value Option?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Should Value Investors Buy Kyocera (KYOCY) Stock?

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation (President: Hideo Tanimoto) today announced FOREARTH, a new inkjet textile printer that aims to eliminate virtually all water usage from fabric printing. We expect this printer to contribute to eliminating printing-related water pollution, which has long been an issue in the textile and apparel industries. Development Background Traditional analog textile printing consumes a large amount of water, especially in the washing and steaming processe.

KYOCERA Announces FOREARTH, a New Sustainable Inkjet Textile Printer

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation announced its consolidated financial results for the fiscal year ended March 31, 2023.

Kyocera Announces Consolidated Financial Results for Year Ended March 31, 2023

NextNav

SAN DIEGO--(BUSINESS WIRE)-- #Respondersafety--Kyocera International, Inc., a leader in rugged mobile solutions, announced today the integration of NextNav Pinnacle vertical location technology into Kyocera's DuraXV Extreme+ feature phone. Simple and easy to use, DuraXV Extreme+ is designed for those working in harsh environments, such as industrial or construction sites, and is now available in Verizon stores and via Verizon Frontline for public safety and first responders nationwide. The DuraXV Extreme+ include.

NextNav Vertical Location Technology with Floor Level Accuracy Now Available on Ultra-Rugged Kyocera DuraXV Extreme+

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation (hereafter Kyocera, President: Hideo Tanimoto)(TOKYO:6971) today announced that its Electronic Components Division has developed a new capacitor (MLCC) with EIA 0201 size (0.6 mm x 0.3 mm) and the industry's highest*1 capacitance of 10 microfarads. Samples will be available in September 2023. Product Overview Product name KGM03 Series MLCCs Size 0.6 mm × 0.3 mm × 0.55 mm Max. Characteristics X5R (EIA) Capacitance 10µF Tolerance K (±10%), M (±20.

KYOCERA Develops EIA 0201 Size Multilayer Ceramic Capacitor (MLCC) with the Industry's Highest*1 Capacitance of 10 Microfarads

Kyocera has signed an EMEA contract with Sidetrade , a global AI-powered Order-to-Cash platform, to maximize revenue and enhance productivity. Kyocera Document Solutions Europe (KDE), a leading global provider of total document solutions, has selected Sidetrade to control and analyze their cash flow and enhance productivity for central EMEA.

Kyocera selects Sidetrade to underpin its EMEA growth

KYOTO, Japan--(BUSINESS WIRE)--Kyocera Corporation announced that it has reached an agreement to acquire about 37 acres of land for a new smart factory in Isahaya City, Nagasaki.

Kyocera to Acquire Construction Site in Japan for New Smart Factory

TE Connectivity

KYOCY vs. TEL: Which Stock Is the Better Value Option?

KYOCY vs. TEL: Which Stock Should Value Investors Buy Now?

KYOTO, Japan--( BUSINESS WIRE )--Kyocera Corporation (President: Hideo Tanimoto) today announced it has developed a new “contactless intelligent millimeter-wave sensing system”. The system includes a high-precision, low-noise sensor that can detect minute vibrations (measured in microns) with no physical contact, and various software modules for comprehensive AI-based solutions for various applications.

Kyocera Develops New “Contactless Intelligent Millimeter-Wave Sensing System”

KYOTO, Japan--( BUSINESS WIRE )--Kyocera Corporation (TOKYO: 6971) today announced its consolidated financial results for the third quarter of the fiscal year ending March 31, 2023. Results are summarized below, both as an aggregation of Kyocera's first three fiscal quarters (the “period,” i.e., nine months), and as the third quarter alone (the “quarter,” i.e., three months) ended Dec. 31, 2022. Complete details are available at: https://global.kyocera.com/ir/library/f_results.html

KYOCERA Announces Consolidated Financial Results for Third Quarter, Ended Dec. 31, 2022

GOLETA, Calif.--( BUSINESS WIRE )--KYOCERA SLD Laser, Inc. (KSLD), a world leader in commercialization of laser light sources, is introducing its new high power 5 watt blue laser diode products for industrial, biomedical, defense and display applications at the SPIE Photonics West Exhibition, January 31 – February 2, 2023 in San Francisco, CA. The company will showcase this new product line along with its new high brightness White/IR LaserLightTM SMD products, winner of the 2021 Prism Award. Additionally, KSLD will demonstrate its DataLightTM high speed LiFi communication system, a 2023 Prism Award finalist, as well as its new innovations in high efficiency laser diodes for AR/VR applications and efficient optical power transfer technology.

KYOCERA SLD Laser Introduces High Power Blue Laser Diode Product Line for Industrial, Biomedical, Defense and Display Applications

GOLETA, Calif.--( BUSINESS WIRE )--KYOCERA SLD Laser, Inc. (KSLD), a world leader in commercialization of laser light sources, has announced the introduction of the world's first LaserLightTM Headlight Modules that deliver high brightness white and infrared (IR) dual illumination for night vision and sensing for increased safety and visibility in automotive and mobility applications. The company will demonstrate these new laser-based headlight modules and its entire award winning LaserLight product line, as well as its recent innovations in efficient optical power transfer and high speed LiFi communication at the Consumer Electronics Show January 5 – 8, 2023.

KYOCERA SLD Laser Introduces World's First Laser-based Automotive Headlight Modules with White and Infrared Dual Illumination for Increased Safety and Visibility

Japan's Kyocera Corp plans to invest 1.3 trillion yen ($9.77 billion) for manufacturing facilities and development of semiconductor-related products over three years starting in the 2023/24 business year, the Nikkei daily reported on Tuesday.

Japan's Kyocera to invest $9.8 bln for chips over FY2023-2025 -Nikkei

KYOTO, JAPAN--( BUSINESS WIRE )--Kyocera Corporation (President: Hideo Tanimoto; hereinafter, “Kyocera”) today announced plans to build a new manufacturing plant in Isahaya City, Nagasaki Prefecture, to advance its business expansion goals. The company has made an offer to acquire approximately 150,000 square meters (about 37 acres) in the Minami Isahaya Industrial Park.

News for Kyocera Corp Stock (KYOCY)