Stock Analysis & Valuation ROHM Co., Ltd. (6963.T)

• Previous Close: ¥2,694.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	1592.83	-41
Intrinsic value (DCF)	779.82	-71
Graham-Dodd Method	904.85	-66
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

ROHM Co., Ltd. (6963.T) is a leading global manufacturer of electronic components headquartered in Kyoto, Japan. Specializing in semiconductors, ROHM operates across three core segments: ICs (integrated circuits), Discrete Semiconductor Devices, and Modules. The company serves diverse industries, including automotive, consumer electronics, and industrial applications, with a broad product portfolio ranging from power management ICs and microcontrollers to SiC (silicon carbide) power devices and optoelectronic components. ROHM has strategically partnered with major players like Geely Automobile and Delta Electronics to advance automotive and gallium nitride (GaN) power device technologies. With a strong focus on innovation, ROHM is a key player in the semiconductor industry, particularly in energy-efficient and high-performance solutions. Its global footprint and technological expertise position it as a critical supplier in the rapidly evolving electronics and automotive sectors.

Investment Summary

ROHM Co., Ltd. presents a compelling investment case due to its diversified semiconductor portfolio and strong positioning in high-growth markets like automotive and industrial electronics. The company’s focus on SiC and GaN power devices aligns with global trends toward energy efficiency and electrification. Financially, ROHM maintains solid profitability (net income of ¥53.97 billion in FY2024) and a conservative beta (0.5), suggesting lower volatility relative to the broader market. However, high capital expenditures (¥166.27 billion) and substantial total debt (¥340.14 billion) could pressure cash flows. The dividend yield (~1.1% based on a ¥50/share payout) is modest, making the stock more suitable for growth-oriented investors. Risks include semiconductor cyclicality and intense competition from larger global players.

Competitive Analysis

ROHM Co., Ltd. competes in the semiconductor industry by leveraging its expertise in power devices, analog ICs, and optoelectronics. Its competitive advantage lies in its specialization in SiC power devices, which are critical for electric vehicles (EVs) and renewable energy systems—a market where ROHM has secured partnerships with automakers like Geely. Unlike broad-line competitors, ROHM focuses on niche high-performance segments, allowing for deeper customer relationships and higher margins. However, it faces stiff competition from larger firms with greater R&D budgets and economies of scale. ROHM’s modular approach (e.g., wireless charging modules) differentiates it in consumer electronics, but its reliance on the automotive sector (~30% of revenue) exposes it to cyclical demand. The company’s foundry services and MEMS capabilities add diversification but remain smaller than dedicated foundries like TSMC. Overall, ROHM’s strength lies in technological specialization, but its mid-size scale limits pricing power against giants like Infineon or Texas Instruments.

Major Competitors

• Infineon Technologies AG (IFNNY): Infineon is a leader in power semiconductors, particularly in automotive and industrial markets. Its SiC and IGBT technologies compete directly with ROHM’s offerings, but Infineon’s larger scale gives it cost advantages. Weaknesses include higher exposure to European auto demand cycles.
• STMicroelectronics N.V. (STM): STMicroelectronics excels in automotive and IoT-focused semiconductors, with strong SiC and MEMS portfolios. Its broader product range and European manufacturing base provide diversification, but ROHM’s focus on Japan and Asia offers regional supply-chain resilience.
• ON Semiconductor Corporation (ON): ON Semi is a key rival in power devices and sensors, with aggressive SiC investments. Its vertical integration (e.g., in-house wafer production) reduces costs, but ROHM’s partnerships (e.g., with Delta) provide flexibility in GaN and advanced packaging.
• Renesas Electronics Corporation (6723.T): Renesas dominates in automotive microcontrollers and system-on-chip solutions, overlapping with ROHM’s IC segment. Its scale in auto electronics is superior, but ROHM’s discrete semiconductor and SiC focus offers differentiation.
• Texas Instruments Incorporated (TXN): TI’s analog ICs and embedded processors compete with ROHM’s offerings, but TI’s vast distribution network and economies of scale are unmatched. ROHM’s SiC and GaN specialization provides a niche edge in high-power applications.