According to the FT Maruwa, which was better known for its ceramics and porcelain tableware, has unexpectedly benefited from the rise of generative AI, electric vehicles, and the tech industry's battle against overheating.
Maruwa's shares have nearly doubled in the past year, reaching a record high since April began.
The Aichi-based company now boasts a market value of $2.75 billion. It has attracted significant attention, including a detailed report from Goldman Sachs. Other financial institutions are planning to provide analyses.
Maruwa has adeptly adapted its traditional expertise to produce modern ceramic components. Known for its fine dining ware in Japanese feasts, the company ventured into this sector during Japan's economic boom in the 1960s.
The company excels in creating ceramics for circuit boards and semiconductors, particularly materials that dissipate heat in high-temperature electronics, such as those found in AI server farms and crucial inverter power modules in electric vehicles.
The surge in AI has increased the need for server-cooling technologies.
Maruwa's most sought-after products are ceramic circuit boards for high-speed optical communications. These are essential as tech giants expand their data centers, which are the physical foundation of their generative AI initiatives.
Maruwa anticipates that "next-generation high-speed communications, especially those linked to generative AI, will be the main catalyst for our business growth in the coming years."
Goldman Sachs analyst Mitsuhiro Icho estimates that Maruwa holds 60% of the global market for heat-dissipating substrates in crucial optical transceivers. Due to the soaring demand related to AI, he forecasts this market will be valued at $12.3 billion by 2027.
Icho notes that Maruwa's position is secure from new competitors, as it's almost "impossible" for non-ceramic suppliers to enter the market. The company's extensive history in ceramics has built strong barriers around its materials and manufacturing processes, with its age being a key advantage.
"With over 200 years of history as a ceramic provider, the accumulated knowledge and technology since the early 1800s give the company its competitive edge," Icho explains.
Maruwa has been conservative with its sales projections, only slightly increasing them in February for the financial year that ended in March. However, Icho from Goldman Sachs believes that the company's AI server-related sales could grow 60 per cent annually over the next five years.