Japanese chipmaking equipment manufacturer, Kokusai Electric, is preparing to launch its initial public offering (IPO) on Thursday, making it the largest IPO in Japan in the past five years. The company aims to offer shares worth ¥111.2bn ($750mn) at an indicative price of ¥1,890 each, giving it an estimated market value of ¥435.5bn ($3.7bn).
The timing of Kokusai's IPO coincides with a surge in artificial intelligence (AI), which has propelled related companies to outperform and boost stock markets. However, concerns about short-term demand for chips and chipmaking gear have emerged as Taiwan Semiconductor Manufacturing Company (TSMC) reportedly requested its suppliers to delay equipment delivery due to subdued global demand.
TSMC has also postponed the start of mass production at its Arizona facility due to a labor shortage, potentially leading to fewer orders. Despite these challenges, investor sentiment in Japan remains strong. The country's equity market reached its highest levels in over three decades this year, benefiting companies new to the market. New listings in Japan have outperformed others in the region this year.
Kokusai's value proposition is further reinforced by competitive pricing compared to global peers such as US-based Applied Materials (NASDAQ:AMAT), which unsuccessfully tried to acquire Kokusai in 2019 due to resistance from Chinese antitrust authorities. Shares of Asian chip gear companies like Tokyo Electron have risen more than 60% year-to-date.
In the long term, Kokusai stands to benefit from the Japanese government's efforts to bolster the country's chip sector. A new economic security law identifies semiconductors as crucial for everyday life and the economy. This law is expected to result in subsidies worth $2.8bn being awarded to related companies. Given this support and the momentum in the local equity market, Kokusai's market debut appears promising.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.