Kokusai Electric hit its daily limit, down 15.6% and 56% below its July peak, after the midterms
The memory-tool maker printed a record June quarter, raised guidance, then closed November 5 pinned to its daily limit, 56% below the July peak. The November 9 results decide whether DRAM demand compounds or peaked in 2026.
Vincent Jiang · 3 min read
A limit-down day for the AI memory trade
Kokusai Electric−15.63% — Kokusai Electric, down 15.63 percent today, the Tokyo maker of batch furnaces that deposit and bake films onto memory wafers, closed at ¥5,400 on November 5, down 15.63% and pinned to its daily lower limit on 8.3 million shares; it traded at ¥5,320 after the close 1. The Nikkei 225 fell for a fourth straight session, down 1,110 points to 61,077.90, and test-equipment maker Advantest alone subtracted about 1,097 of them 2.
The trigger was political: the November 3 US midterm elections gave the Democratic Party majorities in both houses of Congress, raising expectations of tighter oversight of AI development and data-center construction 2. The broader Topix index still rose 1.16% 2.
The record quarter underneath
The June quarter, reported on August 5, was the best in the company's history 13. Revenue reached a record ¥75.4 billion, up 45.6% year on year, on DRAM and logic demand from outside China 13. Orders came in near ¥140 billion, far above the initial outlook and close to twice what was booked as revenue 3.
Operating margin widened to 21.1% from 18.8%, net profit rose 70.6% to ¥11.6 billion, and free cash flow more than tripled to ¥6.6 billion 3. Management lifted its full-year forecast and its dividend 1. Spun off from Hitachi Kokusai Electric in 2018 and listed in Tokyo in 2023 4, the company still counts buyout firm KKR's vehicle among its largest holders, at 10.37% 1.
Every line of the June quarter grew faster than the one above it
Free cash flow grew fastest of all
- Estimate
Data
| Value | |
|---|---|
| Revenue | 45.6% |
| Operating profit | 63.9% |
| Net profit | 70.6% |
| Free cash flow (estimate) | 230% |
Two camps, one question about 2027
The Wall Street research firm Bernstein made Kokusai a top Japan long in late October, expecting another guidance raise on memory orders from Chinese and non-Chinese customers 5. Eleven of 13 analysts are buyers, with an average target of ¥10,993.9, about twice the limit-down price 3. Capital Research and Management, one of the largest institutional holders, went the other way, selling $130.4mn on October 19 and cutting its stake to 9.04% 16.
The customers split the vote the same week. Memory maker Kioxia closed 16% lower on November 2 after its December-quarter forecast missed consensus, a guide that Bernstein analysts led by Mark Li called "a massive miss" 7. SK Hynix−11.68% — SK Hynix, down 11.68 percent today rallied on record profit and said long-term agreements with 14 customers already cover more than half its capacity for 2027 and 2028 79.
Even before the rout, at ¥6,778, the shares traded at 27.1x forward earnings, level with the two-year average of 27.3x 3. Investors were paying the average multiple for record results, and the selloff has since taken a further fifth off the price 1.
From the July peak to the daily limit in four months
The shares now sit just above their March low
Data
| Share price | |
|---|---|
| 31 Mar | ¥4,869 |
| 1 Jul | ¥12,220 |
| 28 Oct | ¥7,265 |
| 30 Oct | ¥6,919 |
| 4 Nov | ¥6,400 |
| 5 Nov | ¥5,400 |
November 9 decides it
The September-half results land on November 9 1. The bull case rests on the customers: Kioxia says its planned capacity for 2027 is already sold out 7, and SK Hynix expects demand to exceed supply through 2030, with investment rising significantly next year 9.
The selling prices a fear rather than a fact: SK Hynix fell 9.5% in the same wave, no order cancellations have been reported, and no US rule has been enacted 8. No document yet shows whether DRAM capital spending holds into the 2027 financial year 611. Capital Research has answered with a $130.4mn sale 61; the guidance answers in public on Monday 1.
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