How would you assess Toyo Tanso’s performance in 2025, particularly given the disruption across the semiconductor and automotive industries?

There were many developments in 2025, particularly in power semiconductors. Around half of power semiconductor applications are related to automobiles, while the remainder serve areas such as inverters and communications. We had already expected EV production to decline, but the market became even more complicated because of tariffs and the resulting changes to global supply chains. Automotive manufacturers had to reconsider where they produced and sourced components, including operations across Southeast Asia, Mexico, Canada, and the United States. Semiconductor manufacturers also had to revise their plans, and excess inventories led some companies to reduce production quite rapidly.

It was therefore a difficult environment. Our power semiconductor-related business still generated relatively good sales, while our single-crystal silicon business remained steady and helped offset weakness elsewhere. Overall, 2025 was a good year for us, although growth was not as strong as originally expected. We essentially accomplished what we wanted to achieve, but the global business environment changed significantly and required much greater flexibility.

How did tariffs and supply-chain uncertainty affect your operations, and what enabled the company to remain resilient?

Tariffs affected much more than business directly involving the United States. Our customers had to decide whether to continue existing supply chains, move production to the United States, or manufacture in other countries. That uncertainty also affected investment decisions because companies could not commit capital without knowing how supply chains would evolve.

One of our advantages is our global manufacturing network. We have 15 plants around the world covering major markets. We currently manufacture materials in Japan and ship them to our overseas subsidiaries, including in the United States. Because materials represent a relatively small proportion of the total production cost, the direct tariff impact on us was limited. In some cases, customers also accepted price increases resulting from higher tariff-related costs.

The bigger issue was helping customers respond to a changing environment. We were able to offset declines in certain businesses with growth elsewhere and shift production between locations when necessary. Having multiple businesses and manufacturing locations gave us the flexibility to respond rather than depend on one market or production base.

What organizational changes have you made to strengthen Toyo Tanso’s global strategy and corporate governance?

We established three important divisions beginning in 2024. One focuses on global strategy, another on the global supply chain, and the third supports our subsidiaries in areas including legal matters, environmental issues, taxation, expenses, process technologies, programming, and vacuum technologies. We have specialists responsible for each category who can support operations around the world. If a problem occurs, we can quickly assign someone to address it or transfer the necessary technology.

Our global strategy function analyzes each market, product line, application, and customer base. We examine market size as well as our strengths and weaknesses, establish priorities, and determine where investment is required. Any investment proposal must then be explained in detail to the board.

We also monitor capacity utilization across subsidiaries. If one plant is operating close to full capacity while another has available capacity, production can be redistributed. The same approach applies to inventory across our different materials and product lines, including graphite, carbon, and carbon-fiber composites. This centralized visibility has significantly strengthened our global management.

What are your main strategic priorities for 2026, and where do you see opportunities for further growth?

We have not yet covered every market available to us, so there is considerable room for expansion. Previously, our ability to enter some new areas was limited by capacity. When we recognized in 2024 that market conditions would become less busy, we saw an opportunity to approach new customers, applications, and markets more aggressively overseas.

During 2025, we opened those doors and asked potential customers to evaluate our products. Many of those evaluations have now been completed, which means 2026 is the year when we can begin converting that work into new business. A significant proportion of these opportunities are in semiconductor applications. Because we already have plants in the major countries where these industries operate, we do not necessarily need to establish an entirely new geographic presence. We can use our existing network to pursue new customers and applications.

That gives us a strong platform for growth. The work undertaken during the slower period was important because it allowed us to prepare new opportunities rather than simply wait for existing markets to recover.

How are geopolitical and energy-related uncertainties influencing your planning for 2026 and beyond?

The current energy situation is creating significant challenges for global supply. Companies are competing to secure raw materials and components from limited sources, which is pushing prices higher and constraining capacity. Some suppliers and customers may eventually have to reduce production because they cannot obtain the parts or materials they require.

So far, we have not suffered significant disruption. We secured the parts and resources we need, and we can continue supplying our customers. However, we have to think beyond the immediate situation and consider what could happen six months or a year from now.

That requires very close communication with customers. I am visiting major customers personally to understand their circumstances and how their forecasts may change. I recently returned from Korea and will also visit the United States and Europe. We need to understand whether customers expect changes in demand, their own customer bases, or their production forecasts. The better we can anticipate those changes, the more accurately we can adjust our production. In this environment, preparation and forecasting are extremely important.

What new business opportunities are emerging from the global transition toward alternative energy sources?

We see considerable opportunity in energy. One area is green hydrogen. Companies around the world are developing hydrogen-production facilities, and components associated with our technologies can be used in these new applications. That is becoming an increasingly interesting market for us.

Natural-gas power generation is another important opportunity, particularly in the United States. There is significant investment in increasing power-generation capacity, and Japanese companies are participating in that development. At the same time, AI companies and data centers require enormous amounts of electricity, which is increasing demand for additional generating capacity.

Nuclear energy also offers potential. We are involved in high-temperature gas reactor technology, which differs from conventional light-water-cooled nuclear power generation because it uses gas rather than water in the cooling process. We have recently been involved in projects with partners in France and have also worked with X-energy in the United States, as well as on projects involving China and Japan.

These developments are creating opportunities across several energy technologies, and our materials expertise allows us to participate in applications beyond our traditional markets.

How is Toyo Tanso using artificial intelligence and automation within its own operations?

We are working to accelerate the use of AI throughout the company, not only in production but across our divisions more generally. Each division is examining how new AI systems can reduce workloads, improve efficiency, and support decision-making.

In manufacturing, we began using AI for production process control approximately two years ago. We combine production data with the knowledge accumulated by our employees, allowing AI systems to help determine appropriate process controls. Manufacturing conditions can change every day, so the ability to continuously analyze information and adjust processes is increasingly valuable.

We are also expanding the use of robotics connected with AI. This is particularly relevant in Japan because the population is declining while the proportion of older people is increasing. Automation can help address labor shortages, but it can also create working environments in which employees are able to remain productive for longer. Many of our employees continue working until 65, and some remain with us until around 70. Technology therefore supports both productivity and a more sustainable workforce as Japan adapts to demographic change.

What is Toyo Tanso’s value proposition for international investors and potential partners?

A major part of our value proposition is our commitment to developing new materials and applications. We have two development divisions with different objectives. One focuses on basic research, while the other develops new products for existing applications.

Our basic research center represents a particularly important change. We do not want researchers to be restricted by the way we have traditionally processed graphite. They can explore different raw materials, equipment, processes, and approaches. We have also invested in new analytical and inspection equipment capable of examining materials at the nano level.

The objective is to develop materials that are very different from what we have produced historically. That can include graphite and carbon as well as composite materials combining graphite with resins, metals, ceramics, or other materials. New applications continuously require new materials, whether in space, medicine, semiconductors, energy, or other industries. We want to be prepared for those opportunities. This is the right time to invest in development without unnecessarily limiting what is possible. We currently spend approximately US$10 million to US$20 million annually on R&D.

How does collaboration with semiconductor equipment manufacturers strengthen your position in the global industry?

One of Japan’s major strengths in semiconductors is its ecosystem of process-equipment and materials manufacturers. Companies producing advanced semiconductor manufacturing equipment are essential to the development of each new generation of chips, and we do business with major Japanese and international players in this field.

These manufacturers continually introduce new designs and require materials capable of meeting increasingly demanding specifications. That creates opportunities for collaboration. We can contribute new designs, techniques, and material technologies depending on what is required inside a particular manufacturing chamber.

Materials have many characteristics that can be adjusted for specific applications, including thermal conductivity, electrical resistivity, hardness, flexural strength, and resistance to thermal shock. Understanding precisely what customers require allows us to develop materials and components suited to those conditions.

That close relationship between equipment manufacturers and materials suppliers is critical to semiconductor innovation. As chip technology advances, equipment designs must evolve, and those designs often require new material solutions. Our ability to work collaboratively with customers on those requirements is therefore an important competitive strength.

Can Japan attract more advanced semiconductor manufacturing as global companies diversify their production footprints?

I believe Japan has a strong opportunity because it already has many of the material manufacturers required for the most advanced semiconductor production. Those suppliers form an important foundation for the industry. Manufacturing leading-edge devices becomes considerably more difficult without access to the specialized materials and technologies that support the production process.

Japan already has that base. If semiconductor device manufacturers establish additional operations here, many of the suppliers and capabilities they require are already available domestically. That creates favorable conditions for further investment.

The semiconductor industry is not simply about the companies whose names are most visible globally. Advanced chips depend on an extensive ecosystem of equipment manufacturers, materials companies, component suppliers, and specialized technologies. Japan remains particularly strong in many of these areas.

As global semiconductor companies reconsider supply-chain resilience and the geographic distribution of production, this existing industrial ecosystem can become increasingly valuable. Japan can offer both technological expertise and access to established suppliers, making the country an attractive location for companies seeking a reliable base for advanced semiconductor manufacturing.

How do you view the potential for deeper economic and industrial cooperation between Japan and the United States?

This is a very good time to consider what Japan and the United States can accomplish together. The United States has enormous natural resources, a very large consumer market, and significant opportunities for investment. Energy is one area where cooperation can develop quickly, including natural-gas power generation and nuclear power.

Japan has technologies that can contribute to those projects. Combining Japanese technology with American resources and market scale can create mutually beneficial investment opportunities. The United States can often move more quickly on major projects than Japan, where development can require considerably more time.

At the same time, American companies are looking at opportunities in Japan, particularly in areas related to AI, servers, data centers, and other infrastructure. That creates potential for investment to move in both directions.

Japan also needs to think strategically about its own long-term industrial development. In previous decades, significant production moved from Japan to countries including China, Malaysia, Taiwan, and the United States. Going forward, companies need a clearer long-term strategy, supported where appropriate by government policy, to determine where investment should be made domestically and internationally.

What message would you give global investors considering Japan or a partnership with a Japanese manufacturing company?

Japanese companies have a strong culture of continuously creating and improving. We call this kaizen. For a manufacturing company like ours, it means always looking toward the next stage and finding ways to improve products, processes, and technologies. We do not stop; we continue moving forward.

For investors and partners, the attraction is the ability to see that change taking place. They can see the improvements, the kaizen, and the effort behind what we do. Importantly, those improvements are not limited to Japan. We transfer what we learn and develop to our subsidiaries overseas, including operations in Germany, France, Italy, the United States, and Thailand.

That ability to develop technology in Japan and then share improvements across an international manufacturing network is one of our strengths. It creates consistency while allowing our operations to respond to customers in different markets.

Continuous improvement is deeply embedded in Japanese manufacturing culture. For companies looking for long-term partnerships, that commitment to developing new technologies, improving existing capabilities, and continually moving forward remains a compelling reason to work with Japanese industry.