MQG.AX - Macquarie Group Limited

ASX - ASX Delayed price. Currency in AUD
+0.10 (+0.07%)
As of 11:24AM AEDT. Market open.
Stock chart is not supported by your current browser
Previous close135.10
Bid135.19 x 0
Ask135.24 x 0
Day's range134.68 - 136.18
52-week range103.30 - 139.10
Avg. volume877,501
Market cap45.77B
Beta (3Y monthly)0.93
PE ratio (TTM)14.98
EPS (TTM)9.03
Earnings date1 Nov 2019
Forward dividend & yield5.00 (3.70%)
Ex-dividend date2019-11-11
1y target est129.79
  • Nintendo Will Prove the Switch’s Longevity This Holiday Season

    Nintendo Will Prove the Switch’s Longevity This Holiday Season

    (Bloomberg) -- Nintendo Co.’s Switch console is poised for its best holiday shopping season yet.The company will probably sell 9.46 million units of Switch hardware and 64.73 million units of software in the quarter ending December, according to analyst estimates compiled by Bloomberg. While the forecast console numbers mark only a slight improvement on last year’s results, it’s games that deliver most of Nintendo’s profit, and software sales may climb about 23%.Achieving those numbers could prompt Nintendo to revise its conservative earnings outlook for the year ending March 2020. The Switch’s performance in its third holiday season will also hold clues for the console’s longevity in an industry where hardware is typically overhauled every five years and rivals Microsoft Corp. and Sony Corp. are already planning new machines for the end of 2020.“This is typically where sales begin to peak out, but it looks like the Switch may have a longer life cycle,” said Kazunori Ito, an analyst at Morningstar Investment Services in Tokyo. “With a desktop console and a portable player in a single machine, Nintendo has a very effective platform for selling game software.”Nintendo designed the console so that it can be used on the big living room screen as well as on the go, and in September it also introduced a cheaper Switch Lite focused on expanding the mobile market. Combined sales have already topped 40 million units since launch in March 2017 and many analysts expect the Switch will last long enough to reach the 100 million record set by the Nintendo Wii.There’s More to Nintendo’s Game Than Gadget Sales: Tim CulpanThe Kyoto-based company has stuck with a conservative forecast for operating profit of 260 billion yen ($2.4 billion) on 1.25 trillion yen in revenue for the year ending March 2020. That’s short of analysts’ expectations of 308.8 billion yen and 1.28 trillion yen, respectively.Nintendo also expects to sell 18 million Switch units and 125 million new software titles this fiscal year. That compares with the average of four analysts’ estimates for 19.07 million, and the 147.43 million average of nine estimates.“Last year’s holidays is a high hurdle to clear,” said Masaru Sugiyama, an analyst at Goldman Sachs Group Inc. “But there is a good chance for year-on-year growth.”The 2018 lineup included a Pokemon double-issue that sold a combined 10 million units in a month and a half to the end of the year. Super Smash Bros. Ultimate launched on Dec. 7 and raked in sales of over 12 million units. Nintendo sold 9.42 million Switch consoles in that holiday quarter and a total of 52.5 million units of software.This year, Nintendo is again targeting the Pokemon fan base with two new titles -- Pokemon Sword and Pokemon Shield. The games, which debuted on Nov. 15, have come under criticism from fans unhappy with the quality of graphics and animations and the lack of the full stable of “pocket monsters.” Still, sales exceeded 6 million units during the launch weekend, making it the fastest-selling Switch game to date.“It’s a Pokemon title, so unless you are giving up on the franchise, it’s hard to imagine fans not buying it,” said Damian Thong, an analyst at Macquarie Group Ltd. “Pokemon Sword and Shield will probably end up being the single largest game in terms of launch year revenue, probably bigger than Smash Bros.”In October, Nintendo released Ring Fit Adventure, an $80 exercise game that comes with a flexible plastic ring that tracks the player’s motion by slotting in one of the Switch’s Joy-Con controllers and having the user strap the other to their leg. With that basic motion-capture setup, gamers wage heroic battles and clear stages by jogging and doing squats.Nintendo is looking to repeat the success of the Wii Fit -- the exercise game that broke new ground when it was introduced in 2012 along with a Balance Board peripheral. It sold more than 50 million units and was key to broadening the appeal of the Wii console to new audiences. Ring Fit Adventure is off to a promising start, as Nintendo on Friday apologized for being unable to keep up with overwhelming demand.The Wii went on to sell over 101 million units of hardware and 900 million games, setting a high standard of success that Nintendo has struggled to live up to since. The company’s share price hit its peak in the year following the Wii’s 2006 launch and the stock now trades about 40% below its 2007 record.So far, the Switch has held its own against its storied predecessor and has even done better in hardware sales during its first two holiday seasons.“The Switch can sell 20 million units annually for the next three years,” said Michael Pachter, an analyst at Wedbush Securities Inc. “So it should easily get to 100 million.”Not everyone agrees. Macquarie’s Thong thinks a lot of the casual gamers that helped power the Wii’s runaway success have moved on to free-to-play games on smartphones, such as Nintendo’s own wildly popular Mario Kart Tour. There is also a lot more competition for people’s free time from social media and streaming video. Still, Nintendo’s prospects remain bright in the near-term.“The focus is the game, not the console itself,” Thong said. “2021 might be an even bigger year for title launches. There is a new Zelda game and it will be time for a mid-cycle refresh for all major Nintendo titles.”To contact the reporters on this story: Pavel Alpeyev in Tokyo at;Yuki Furukawa in Tokyo at yfurukawa13@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at, Vlad SavovFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Is Macquarie Group Limited (ASX:MQG) An Attractive Dividend Stock?
    Simply Wall St.

    Is Macquarie Group Limited (ASX:MQG) An Attractive Dividend Stock?

    Today we'll take a closer look at Macquarie Group Limited (ASX:MQG) from a dividend investor's perspective. Owning a...

  • Reuters - UK Focus

    EXPLAINER-What's behind Labour's plan to overhaul BT and the British broadband network?

    Britain's opposition Labour Party says if it wins the Dec. 12 election it will nationalise BT's broadband network and provide free internet for all within a decade, a radical election pledge to roll back decades of private ownership. The UK's biggest broadband and mobile phone provider was the flagship of Conservative Prime Minister Margaret Thatcher's policy of selling state-owned assets, a political revolution that she said would improve efficiency and "spread the nation's wealth among as many people as possible".

  • Equity trading to only get bloodier in Europe after Macquarie exit

    Equity trading to only get bloodier in Europe after Macquarie exit

    Macquarie Group's sudden exit from European and U.S. equity trading may just be the start of a large-scale retreat from the once-thriving business, as all but the biggest global banks struggle to make it pay. The cash equities business - servicing investors to buy and sell shares - is going through a shakeout as falling trade volumes and costly regulations bite. The changes have led to razor-thin margins at best and made it difficult for smaller rivals to compete with the leading Wall Street powerhouses such as JPMorgan , Goldman Sachs and Morgan Stanley .

  • Australia's Macquarie posts record first-half on trading, asset management gains

    Australia's Macquarie posts record first-half on trading, asset management gains

    Australian investment bank Macquarie Group Ltd posted a record first-half profit on Friday, driven by higher fees from its managed funds, but revealed a slump in traditional banking takings and forecast a weaker annual result. The bank's profit for the six months ending Sept. 30 rose to A$1.46 billion ($1.01 billion), a better-than-promised 11.2% jump despite a slump in M&A fees and losses from investments. The result benefited from Macquarie's diversified strategy, which allows it to offset underperformance in its traditional investment banking and advisory units with growth in its fund management businesses.

  • The OUTstanding Top 100 Role Model LGBT+ Executives 2019
    Yahoo Finance UK

    The OUTstanding Top 100 Role Model LGBT+ Executives 2019

    The executives on the list — who identify as LGBT+ — reflect the incredible achievements of LGBT+ people in the business community.

  • Reuters - UK Focus

    UPDATE 3-Australia's Macquarie to scale back U.S., European equities businesses

    Australian investment bank Macquarie Group said on Tuesday that it will scale back its cash equities businesses in most areas outside the Asia Pacific region as tougher regulations bite. The bank, which employs about 700 people in cash equities, is expected to cut 100 jobs in London and New York, a source with direct knowledge of the matter told Reuters, adding that it will have "smaller teams" in those locations to support its core Asia Pacific businesses.

  • Here's What Macquarie Group Limited's (ASX:MQG) P/E Ratio Is Telling Us
    Simply Wall St.

    Here's What Macquarie Group Limited's (ASX:MQG) P/E Ratio Is Telling Us

    Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. We'll look at...

  • Business Wire

    Macquarie Capital Makes Four Senior Appointments to Enhance Leveraged Finance Business

    NEW YORK-- -- Vincent Repaci to head asset-based lending group as Managing Director Matt Magnuson named Managing Director, Head of Credit Analytics Chad Hersch, Jodi Joskowitz appointed to senior trading, sales roles Macquarie Capital, the corporate advisory, capital markets and principal investment arm of Macquarie Group , today announced that it has appointed Vincent Repaci as Managing Director and ...

  • Reuters - UK Focus

    Race for German utility EWE down to two suitors - sources

    The number of suitors for a minority stake in EWE has been boiled down to two as the one of the year's biggest utility deals in Germany edges towards the finishing line, three people close to the matter said. A consortium comprised of Australian infrastructure investor Macquarie and German insurer Allianz is vying with French buyout group Ardian for the stake, which could be valued at 1.2 billion to 1.4 billion euros ($1.3-$1.5 billion), they said. EWE and the suitors either declined to comment or were not immediately available for comment.

  • Reuters - UK Focus

    Macquarie's GIG financed $3 bln of green capital over past year

    Macquarie-owned Green Investment Group (GIG) has invested more than 2.4 billion pounds ($3 billion) globally in low-carbon projects over the past year, it said in its second annual report on Thursday. The GIG was bought by Australia's Macquarie Group in 2017 from the British government and invests in low-carbon energy and infrastructure projects. Macquarie, which had assets under management of $376.6 billion as of March 31, 2019, says it is using the GIG as its primary vehicle for principal investment in green projects in Britain and Europe.

  • Here's Why I Think Macquarie Group (ASX:MQG) Is An Interesting Stock
    Simply Wall St.

    Here's Why I Think Macquarie Group (ASX:MQG) Is An Interesting Stock

    Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story...

  • Sinochem unit discussing blockchain platform with Shell, Macquarie - sources

    Sinochem unit discussing blockchain platform with Shell, Macquarie - sources

    Sinochem Energy Technology Co Ltd, a subsidiary of state oil and chemicals firm Sinochem Group, is in talks with Royal Dutch Shell and Macquarie Group to build an energy blockchain platform, three Beijing-based industry sources said. Shell and Macquarie entered a memorandum of understanding in July to explore building a blockchain platform for crude oil, one of the Sinochem unit's incubator projects with growth potential, said one of the sources who has direct knowledge of the matter. Shell and Macquarie both declined to comment.

  • Sinochem unit discussing blockchain platform with Shell, Macquarie: sources

    Sinochem unit discussing blockchain platform with Shell, Macquarie: sources

    Sinochem Energy Technology Co Ltd, a subsidiary of state oil and chemicals firm Sinochem Group, is in talks with Royal Dutch Shell and Macquarie Group to build an energy blockchain platform, three Beijing-based industry sources said. Shell and Macquarie entered a memorandum of understanding in July to explore building a blockchain platform for crude oil, one of the Sinochem unit's incubator projects with growth potential, said one of the sources who has direct knowledge of the matter. Shell and Macquarie both declined to comment.

  • Bloomberg

    Tiny Japan Firm Helps to Crack Code for Next-Gen Computer Chips

    (Bloomberg) -- Chipmakers have spent two decades pouring investment into a revolutionary new technique to push the limits of physics and cram more transistors onto slices of silicon. Now that technology is on the cusp of going mainstream, thanks to a secretive Japanese company that’s mastered the skill of manipulating light for applications from squid fishing to cinema projection.Ushio Inc. announced July it had cleared a key milestone, perfecting the powerful, ultra-precise lights needed to test chip designs based on extreme ultraviolet lithography or EUV, the process through which the next generation of semiconductors will be made. With that, the Japanese company became a major player in future chipmaking.“The infrastructure is now mostly ready,” Chief Executive Officer Koji Naito said in an interview. “Testing equipment was one of the things holding back EUV. With that piece in place, production efficiency and yields can go up.”Read more: How an Obscure Rubber Company Became a Linchpin of Tech IndustryUshio’s advances cement its position among a coterie of little-known Japanese companies indispensable to the production of the world’s consumer electronics. The Tokyo-based company developed a light source for equipment used to test what are known as masks: glass squares slightly bigger than a CD case that act as a stencil for chip designs. These templates have to be absolutely perfect, as even a tiny defect in one of them can render every chip in a large batch unusable.That’s where Ushio comes in. Its technology uses lasers to vaporize liquid tin into plasma and produce light closer in wavelength to X-rays than the spectrum visible to the human eye. That light helps chipmakers spot potential defects in the product. This process takes a room-sized machine that looks like a sci-fi death ray and requires a team of people to operate. After 15 years in development, the EUV business will start contributing to profit from the next fiscal year, Naito said, without giving further details.The move to EUV is the culmination of a decades-old trend. The push for smaller geometries that started when integrated circuits replaced vacuum tubes in the 1970s is approaching its final stages, and the number of companies that can compete in that space has been whittled down to a handful. Only Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. have plans to use EUV to go smaller than the 7-nanometer processes that are the current cutting edge of CPU design. All three will use lithography machines from ASML Holding NV, and for a few specialist suppliers like Ushio, that means a chance to have a 100% share of their respective markets.“We don’t chase the mass market, even though there is potentially a ton of money to be made in home lighting or automotive,” Naito said. “Instead, we want to focus on niche areas and do things that others can’t.”Naito believes Ushio is positioned to control the market for light sources used in testing of patterned EUV masks, while a small group of fellow Japanese companies specialize in other aspects of the technology. JSR Corp. and Tokyo Ohka Kogyo Co., for instance, control production of the light-sensitive resins required to print the designs, while the blank masks are made by only two companies, AGC Inc. and Hoya Corp., which both use Lasertec Corp.’s machines to test for flaws. All are based in the greater Tokyo area and espouse an almost artisanal commitment to high-precision manufacturing.Why Japan and South Korea Have Their Own Trade War: QuickTakeThe fact that much of the EUV supply chain hails from a single country was seized upon by Japan in its trade spat with South Korea. Tokyo slapped export restrictions on key materials heading to Korea, giving undesired attention to companies that prefer to operate behind the scenes. While Ushio’s machines were not targeted, photo-resists made by JSR and Tokyo Ohka made the sanctions list. The government has since relented, but concern lingers that the industry’s delicate balance may be again disrupted in the future.“There hasn’t been a direct impact for us yet,” Naito said. “But because we have such a high market share for our products, we feel a responsibility to absolutely make sure our customers’ production lines do not stop.”Alongside its EUV ambitions, Ushio commands an 80% share of the market for lithography lamps used to make liquid crystal displays and controls 95% of the supply of excimer lamps used in silicon wafer cleaning. The key to its success is balancing mass production with craftsmanship. Materials like quartz glass are difficult to handle and have different thermal expansion properties from metals like the molybdenum in which they are housed. Some of the lamps still have to be finished by hand.“Wherever you have a manufacturing process that needs to shine a very bright light, you will find Ushio,” said Damian Thong, an analyst at Macquarie Group Ltd.Ushio’s expertise also extends beyond semiconductors. Founded in 1964, it was the first Japanese company to develop and produce halogen lamps. From 1973, fishermen began to use its lights to catch squid -- -- a controversial technique in many countries. Finding new uses for its technology, from tanning salons to movie projectors, helped Ushio more than triple its sales over the past 25 years. The company is now experimenting with the use of sodium lamps to nurture plants and using ultraviolet light calibrated to such a precise wavelength as to kill bacteria without damaging human skin.“For Japanese firms with strong legacy manufacturing technology, the bigger danger is being trapped in them,” Thong said. “You have to give Ushio credit for moving further downstream, away from manufacturing toward something that requires more system integration.”To contact the reporters on this story: Pavel Alpeyev in Tokyo at;Yuki Furukawa in Tokyo at yfurukawa13@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at, Vlad SavovFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • U.S. Firms Steer Clear of Europe's Big Mobile Tower Sell-Off

    U.S. Firms Steer Clear of Europe's Big Mobile Tower Sell-Off

    (Bloomberg) -- European phone companies are selling their mobile masts and growth-hungry U.S. tower companies have money to spend -- it looks like a marriage made in heaven.Instead, firms like American Tower Corp. and Crown Castle International Corp. are largely staying away, making it easier for Spain’s Cellnex Telecom SA and infrastructure funds managed by Macquarie Group Ltd., KKR & Co. and others to sweep up the region’s tower assets.Their hesitation is driven partly by price: the global hunt for yield has driven up the premium for these assets, which offer reliable, steady income streams. Independent tower companies also won’t pay top dollar unless they see a path to significant revenue growth -- and that’s where they have a problem with Europe.“The American tower companies say, ‘OK, Europe is fine at the right price, but prices are not where we need them to be, so we think the opportunities elsewhere are more attractive,”’ said Nick Del Deo, senior analyst at U.S. research firm MoffettNathanson.Tens of thousands of European masts are expected to see ownership changes in the next two years as companies such as Iliad SA, Vodafone Group Plc and Telecom Italia SpA bring in new investors to reduce debt and share the heavy cost of rolling out 5G technology.But only a quarter are likely to end up with independent operators, according to TowerXchange. Vodafone and CK Hutchison Holdings Ltd. are creating separate units for almost 90,000 towers and the consultancy expects them to maintain control over those businesses. That’s a turn-off for independent companies, which try to maximize revenue by leasing mast space to as many network operators as possible.Many European carriers want to keep some hold on their towers because they see mobile infrastructure as a strategic asset that can help them manage costs and perhaps gain a competitive edge. They’re also mindful of what happened in the U.S., where operators rushed to sell their towers more than a decade ago only to find themselves stuck with a big bill for leases and capacity rights.Vodafone Surges on Possible IPO, Stake Sale of Towers UnitVodafone and Telefonica Ink 5G Terms in Move to U.K. Tower SalesNiel Agrees to $3 Billion of Phone Tower Sales to CellnexCK Hutchison to Separate Out European Phone Towers BusinessSelling full ownership of towers to independent players can spur innovation and reduce expenses by encouraging carriers to share infrastructure, avoiding costly duplication. European carriers’ insistence on maintaining control means the continent’s progress in rolling out 5G will likely continue to be slower compared to the U.S., where towers are largely in independent hands.“There is a risk that the European carriers go too far the other way,” Del Deo said. “The captive tower model, if you look globally, has never proven to be that effective.”For now, American Tower is mostly relying on building towers in Africa, Latin America and India for its international growth.Crown Castle didn’t respond to a request for comment on its future European asset bidding plans. American Tower declined to comment. Its chief executive officer, James Taiclet, told analysts last month that recent large European tower sales didn’t meet its bar for growth prospects and asset costs.Here are some other reasons why U.S. tower firms aren’t piling into Europe:Redundancy: Europe has more cases of towers operated by rival carriers sitting in close proximity. An independent owner may want to remove one to cut costs, but the tower often comes with a ground lease that they must keep paying for years.Less Potential: Europe has lots of rooftop antenna sites, which can’t accommodate as many customers as can a ground-based tower. Many European portfolios include broadcast towers in rural areas that may not be as valuable as mobile towers.Radio Emission Rules: In some countries, rules on maximum electromagnetic radio emissions limit the number of antennas a tower firm can install at a single site.\--With assistance from Scott Moritz.To contact the reporter on this story: Thomas Pfeiffer in London at tpfeiffer3@bloomberg.netTo contact the editors responsible for this story: Kenneth Wong at, Jennifer Ryan, Anthony PalazzoFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Macquarie finalises $675 million capital raising at small discount

    Macquarie finalises $675 million capital raising at small discount

    Australian investment bank Macquarie Group finalised its biggest ever capital raising of A$1 billion ($675.4 million) on Thursday at a small discount to its stock's closing price before the deal was launched. The final price of A$120 per share was 2.8% below the close on Tuesday, which, according to two investment banking sources, marks the smallest discount for a capital raising over A$800 million in Australian corporate history. The placement will increase Macquarie's total number of outstanding shares by about 2.5%.

  • Australia's Macquarie to raise $675 million for renewables, tech investment

    Australia's Macquarie to raise $675 million for renewables, tech investment

    Australian investment bank Macquarie Group Ltd has targeted A$1 billion ($675.4 million) in its biggest capital raising to ramp up investment and take advantage of expected asset price growth in renewable energy, infrastructure and tech. The raising comes just three months after Macquarie reported A$5 billion in excess capital, prompting UBS analysts to question the need to sell shares while Goldman Sachs analysts called the exercise a "surprise". The bank is offering shares to institutional investors priced A$118 to A$123.5 each, two people with direct knowledge of the matter told Reuters.

  • China AI Startup to File for Hong Kong IPO Soon Despite Protests

    China AI Startup to File for Hong Kong IPO Soon Despite Protests

    (Bloomberg) -- Chinese artificial intelligence startup Megvii is filing documents soon for a Hong Kong initial public offering that could raise as much as $1 billion, people familiar with the matter said, proceeding despite a market downturn spurred by pro-democracy protests across the financial hub.The owner of facial-recognition platform Face++ plans to submit an IPO filing to the Hong Kong Stock Exchange as soon as Friday, one of the people said, asking not to be named because the matter is private. Megvii declined to comment.Megvii is moving forward even as other companies pump the brakes on their Hong Kong listing ambitions, wary of months of protests that have gripped the city. Alibaba Group Holding Ltd., a backer of Megvii’s, is among those that are gunning for a Hong Kong listing but have held back to gauge investors’ reception.Megvii’s offering may face particular challenges. It would be the first in a coterie of Chinese AI companies to go public, raising money that would help further China’s effort to lead the sector by 2030. Donald Trump’s administration has raised the alarm about China’s ambitions in technology, which may erode the interest of U.S. money managers in the country’s AI startups."It’s a bit political," said Mark Tanner, founder of Shanghai-based research and marketing company China Skinny. “Trump’s big concern is that China has the aspiration to be the leader in AI.”Megvii’s filing will kick off the formal process for an IPO, though it could be months before its actual debut. Megvii competes with SenseTime Group Ltd. -- also backed by Alibaba -- in facial and object recognition technology and Internet of Things software.The seven-year-old outfit now provides face-scanning systems to companies from iPhone-maker Foxconn Technology Group to Lenovo Group Ltd. and Ant Financial, the payments giant that supports Alibaba’s e-commerce business. Its facial recognition technology has provided verification services to more than 400 million people, Megvii said in a statement in January.Beyond commerce, the company is also building software for sensors and robots. And the Chinese government is a client: Megvii’s AI technology has been used by authorities in more than 260 cities and helped police arrest more than 10,000 people, it said in January. The company last raised $750 million in a Series D financing round in May from investors including China Group Investment, ICBC Asset Management (Global), Macquarie Group and a unit of the Abu Dhabi Investment Authority. Its other backers include Boyu Capital, Ant, SK Group, Foxconn, Qiming Venture Partners and Sinovation Ventures.Megvii could have a first mover’s advantage."IPOs have been pretty disappointing in the past few months, but since AI is a hot category at the moment it could gain more traction," said Tanner.(Adds analyst comment in the fifth paragraph.)To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at, Edwin Chan, Vlad SavovFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Bloomberg

    How an Obscure Rubber Company Became a Linchpin of Tech Industry

    (Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. When Japan decided to step up its fight with South Korea last month, it dug deep into the supply chain to impose sanctions on three obscure materials made by a handful of Japanese companies few have ever heard of.The most powerful weapon in Tokyo’s campaign against its neighbor turned out to be a half-dozen or so niche firms with names like JSR Corp., Shin-Etsu Chemical Co. and Tokyo Ohka Kogyo Co. They make fluorinated polyimide, hydrogen fluoride and photo-resist: essential ingredients for the manufacture of the displays and semiconductors that go into every piece of modern consumer electronics, from Apple Inc. iPhones and Dell Technologies Inc. laptops to the full range of Samsung Electronics Co. devices. Japan prohibited the export of those materials, allowing an exception only if suppliers secure a license and renew that license regularly.How did they become so indispensable? And how did they manage to stay on top even after their Japanese clients ceded the chip and display markets to Taiwanese and South Korean rivals? The answer lies in a series of well-timed investments decades ago, combined with a willingness to explore foreign markets and an unceasing refinement of manufacturing standards too exacting for anyone else to try and match.“JSR is an interesting case in that they became big in photo-resists because they succeeded overseas first,” said Damian Thong, an analyst at Macquarie Group Ltd. “And much of this success was because of the strategy of one man — Mitsunobu Koshiba.”The JSR chairman’s story shows just how hard it would be for a newcomer to fill the shoes of one of these suppliers. Koshiba spearheaded the company’s pivot into photo-resists, a light-sensitive liquid used to imprint circuits as narrow as a few strands of DNA onto silicon wafers in a process called lithography. Gadgets keep getting slimmer, more powerful and cheaper because chip companies are able to etch ever smaller circuit patterns onto silicon. When it comes to the most advanced chip processes, JSR is one of the few that can deliver the goods.When 25-year-old Koshiba joined JSR in 1981, the company’s biggest business was still tire rubber. (The name is an abbreviation of Japan Synthetic Rubber.) As luck would have it, photo-resist at that time used resins that JSR had access to for its existing business, and the company saw an opportunity to break into a new growth industry. Japanese semiconductor makers were just beginning their rise to global dominance, and suppliers were positioning themselves to go along for the ride.The problem for JSR was it didn’t belong to any of the local keiretsu, a grouping of suppliers that receives preferential access to contracts. And the company was also up against Tokyo Ohka or TOK, the first in Japan to manufacture photo-resist. By the mid-1980s, TOK controlled as much as 90% of the domestic market.“As a neutral company without keiretsu affiliations, we had to look outside Japan,” Koshiba said in an interview, outlining JSR’s decades-long rise but declining to talk in detail about sensitive trade negotiations now underway between Tokyo and Seoul.JSR’s decision to get into that market was bold but Koshiba seemed like the right person for the job. He’d spent two years studying materials science at the University of Wisconsin-Madison on a Rotary Club scholarship, was one of the few English speakers at the company and was eager to work abroad. In 1990, JSR sent him to Belgium to set up a photo-resist joint venture with the country’s biopharmaceutical giant UCB SA. The goal was to target the American market.As timing would have it, JSR was going overseas just as Japan was approaching the peak of its semiconductor prowess. That same year, NEC Corp., Toshiba Corp. and Hitachi Ltd. were the world’s biggest chipmakers, pushing aside Intel Corp. and Texas Instruments Inc. Japanese firms occupied six spots in the industry’s top 10 ranking by revenue, a level of concentration that hasn’t been matched by any country since, according to IC Insights.Japan’s seemingly unshakable control of the computer memory market gave the country renewed national confidence. The mood was reflected in the book “The Japan That Can Say No,” in which right-wing politician Shintaro Ishihara and Sony Corp. co-founder Akio Morita argued for a more muscular foreign policy. In an eerie echo of recent events, the authors contended that the Japanese government had the power to determine the outcome of the Cold War just by directing its national companies to sell the chips used in intercontinental ballistic missiles (ICBMs) to the Soviets instead of the U.S.But the Cold War ended before that theory could be tested. Over the following decade, personal computers overtook ICBMs as the primary destination for chips and demand shifted to prioritize low unit costs over military-spec quality. By 2006, Samsung had risen to No. 2 on the list of the world’s biggest chipmakers, with Korean compatriot SK Hynix Inc. ranking seventh and only three Japanese names remaining among the top 10.For JSR, the turning point came in 2000. Koshiba, who was based in California at that time, recalls being dragged into an emergency meeting on a Sunday wearing a T-shirt and shorts. Word was a rival company was about to clinch an agreement with IBM for joint research on a next-generation photo-resist material. “Get it back,” he was told. Koshiba leaned on the network of American industry contacts he had spent a decade building, people who had known him through the worst of U.S.-Japanese trade tensions. Within a month, IBM signed with JSR.“Without that deal, we wouldn’t have gotten to No. 1,” Koshiba said.In lithography, the formula for shrinking transistors has only two levers: increase the light power or use a lens that lets more light through. Every time the chip process shifts to a higher-energy band of light, resist makers have to go back to the drawing board, opening up new opportunity. The research partnership with IBM ushered in the fourth such shift since integrated circuits replaced vacuum tubes in the 1970s, and JSR rode it all the way to the top.The company now commands about 40% of the market for the latest generation of resist used in mass production. It also supplies more than 30% of the photo-resist for 3D NAND, the most advanced flash memory chips, which are among the few product lines where Japan still competes with Korean rivals. In 2019, JSR is expected to generate about three times the revenue and five times the profit it did in the early ‘90s.What makes this business inaccessible to newcomers is the extreme degree of purity and quality demanded by customers. TOK says a single drop of coffee in two Olympic-sized swimming pools would be considered an unacceptable defect. JSR’s analogy is to a handful of tainted golf balls being enough to spoil a batch the size of the entire Japanese archipelago.In addition to being technically challenging, the markets these companies operate in are small and don’t promise fantastic growth. According to research firm Fuji Keizai Group, the industry’s sales rose just shy of 8% last year to $1.3 billion. Koshiba jokes that even the market for ramen noodles is bigger than that.“To recreate JSR, you basically need to spend as much as they did in the past 20 years on R&D and relationships, and also rebuild their reputation,” Macquarie’s Thong said. “These materials are used in such moderate quantities that to rebuild the whole infrastructure is probably not worth the investment.”And that’s the irony of the current situation. By stoking trade tensions, Japan may encourage its neighbor to subsidize competition to JSR and TOK that wouldn’t make sense under normal market conditions. It’s a matter of survival: Korean corporations now depend on Japan for over 90% of all the fluorinated polyimide and resists they need, and 44% of hydrogen fluoride requirements, Societe Generale estimates.Read more: Japan Grants South Korea Export License, Lessening Trade FearsFor the time being, JSR and TOK retain dominance over one prized material that keeps the consumer electronics industry ticking. According to South Korean Prime Minister Lee Nak-yon, Japan has approved exports of photo-resist for the next-generation of lithography currently under development by Samsung and Taiwan Semiconductor Manufacturing Co. But one of Japan’s last strongholds of tech industry domination may be under threat.“They have the engineers, and once national pride is involved they can possibly make it even if it loses money,” Koshiba said. “We don’t have an impregnable wall.”\--With assistance from Jason Clenfield.To contact the reporters on this story: Pavel Alpeyev in Tokyo at;Yuki Furukawa in Tokyo at yfurukawa13@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at, Vlad Savov, Edwin ChanFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • By 2H of 2020, Yuan Will Be at 6.80 to the Dollar: Macquarie’s Le

    By 2H of 2020, Yuan Will Be at 6.80 to the Dollar: Macquarie’s Le

    Nov.26 -- Trang Thuy Le, emerging Asia FX strategist at Macquarie Group, discusses China’s growth indicators, the yuan and her outlook for Asian currencies. She speaks on “Bloomberg Markets: Asia.”

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