UBS: Murata Factory Visit Confirms 20% Output Expansion Potential, Operating Margin Could Nearly Double

UBS (research report dated August 18) stated that Murata Manufacturing's Fukui Takefu plant has opened its doors to market visits for the first time in 20 years, confirming the facility as the advanced MLCC mother plant primarily supplying AI servers and high-end smartphones, with Murata holding approximately 35% global market share. UBS noted that through yield improvement and process optimization, existing equipment still has roughly 20% output expansion potential, but physical capacity expansion is approaching its limits.

UBS maintains a Buy rating with a target price of ¥13,200, believing that under the backdrop of constrained new capacity construction and extended lead times for self-developed equipment components, tapping the potential of existing equipment offers greater certainty than adding new production lines. With Murata shifting general-purpose products overseas while its Japanese plants focus on advanced products such as high-capacitance and small-size MLCCs, operating margin is expected to climb from 15.4% in FY2026 to 37.6% in FY2029. UBS assesses that industry structure will improve over the next six months, with a possible upward revision to earnings guidance around October 31.

[TechFlow]