Japanese materials and component suppliers will inevitably cede share to China because they are too cautious about expanding capacity. Sinocera said its key raw materials for high-end MLCCs passed qualification at some customers; those customers may keep using Chinese suppliers through a downcycle, increasing pressure on Japanese firms. Taiwanese stocks are more attractive than Japanese materials and components plays; unlike Chinese firms, Taiwanese companies expand capacity and return capital. … Show more

Ajinomoto, like Nittobo, is too conservative and cares too much about customer relationships and market share to exploit its pricing power. Despite a severe shortage of high-end glass fiber for AI servers, Nittobo says it has no plans to raise T-glass prices and will instead expand capacity to defend share, which is why its stock has moved sideways. Unlike memory companies aggressively raising prices, these Japanese suppliers are leaving profits on the table. x.com 

Optical fiber is the next bottleneck, because as AI shifts from training to inference, data moving between data centers and users will make traffic explode and drive another huge telecom buildout. YOFC is up 300% this year and Furukawa Electric 200% for that reason. Furukawa's laser and data communications growth is underestimated; that segment's operating profit can rise from ¥10B to ¥30B within two years as big margin expansion arrives. x.com  x.com  x.com 

Nittobo and Ajinomoto are unlikely to deliver alpha because they will not monetize their monopoly pricing power, putting customer relationships ahead of shareholders. SK hynix and Micron raise prices when demand exceeds supply and reinvest profits to widen their technology lead; per @jukan05, Nittobo has no intention of raising prices. In fast-moving chips, customer loyalty does not merit a high valuation premium, even with Ajinomoto holding 95% of ABF film and no qualified Chinese rival yet. … Show more

Fabrinet's low margins suggest it lacks strong pricing power, which outweighs its growth potential and claimed moat. x.com  x.com 

Sumitomo Electric Industries is a growth company priced as value, at a 16.2x trailing P/E despite holding many long-term agreements with AI hyperscalers spanning fiber to lasers. AI has created a bigger medium-term anomaly, pushing value investing toward high-growth, deep-value companies. x.com 

Nittobo's stock is stuck sideways because it will not raise prices despite a severe T-glass shortage. Per Japanese media reports, management plans no further price increases on low-thermal-expansion glass fabric and will instead accelerate capacity in Fukushima and Taiwan to defend market share. Unlike memory makers aggressively raising prices, Nittobo is too conservative and cares too much about customers, which is a reason not to own it. x.com  x.com 

Sumitomo Electric is not an attractive long at about 30x earnings because too much of its revenue comes from automotive components, historically a terrible business. It is well run, with high operating cash flow and major earnings growth, and should still do well in physical AI, but there are better spots. Its equal or better InP manufacturing capability, with supply it can add fairly quickly if margins explode, instead underpins a small short on AXT. x.com 

Apple has trapped itself: after years of unnecessary price hikes while lagging in AI, it cannot raise prices now that memory costs require it without losing consumers. Its reported turn to CXMT memory hurts Apple, not memory makers, because CXMT physically cannot meet demand and using it could backfire on Apple's quality control. It instead strengthens the case for the big three memory makers, especially Micron. Without AI gains, loyal customers may start looking for alternatives. x.com  x.com  … Show more

Downstream PCB makers such as Shenghong Technology are best avoided because material shortages may leave their results weaker than upstream and midstream suppliers', as a post the author replies to suggests. Shenghong's share price has not moved; the test is whether it can pass rising material costs on to its customers. x.com