Aiming for 1nm Process! "Toilet King" TOTO Invests 80 Billion Yen to Bet on Semiconductor Materials

Japanese company TOTO, originally renowned for its bathroom ceramics, is quietly undergoing a transformation thanks to the AI chip boom.

TOTO plans to invest 80 billion yen (approximately $4.95 billion USD) over the next five years to expand its semiconductor materials business, targeting critical support for next-generation chip manufacturing at the 1-nanometer process level. This investment greatly surpasses its mainstay bathroom equipment business, highlighting a fundamental shift in the company’s strategic focus.

The explosion in AI chip demand has turned TOTO’s semiconductor-related operations into its main profit engine. For the fiscal year ending March of this year, its new business segment (which includes semiconductor materials) saw a 34% year-on-year increase in sales to 67.4 billion yen, and a 42% rise in operating profit to 28.9 billion yen—profits from this segment now account for more than half of the company’s total, far outpacing its iconic bathroom ceramics division.

This expansion means that TOTO is embedding itself deeper into the core links of the global advanced chip supply chain and directly connecting with the technical roadmaps of top wafer foundries such as TSMC.

TOTO’s research facility in Kanagawa Prefecture is focusing resources on technical breakthroughs to support production of 1nm-class logic semiconductors. This target is several generations ahead of the current mass production state-of-the-art.

For comparison, the world’s largest wafer foundry, TSMC, currently leads with the 2nm process in mass production. The essential rule of logic semiconductors is the narrower the circuit line width, the more powerful the chip. By betting on 1nm, TOTO aims to lay the groundwork for materials infrastructure for the next generation of processing nodes in advance.

The center of TOTO’s production expansion is in Kyushu, southwestern Japan. TOTO will install the latest equipment to increase production capacity at both Oita Prefecture and Fukuoka Prefecture plants, which are already running at full capacity. The newly constructed firing workshop at the Fukuoka site is expected to be completed in January next year.

Financially, TOTO plans to complete its overall 80 billion yen investment by the fiscal year ending March 2030, with 39 billion yen already secured, and the remaining portion to progress based on market demand. If post-investment production still falls short of demand, TOTO will further consider building new factories.

TOTO’s move into semiconductor materials didn’t happen by chance. As early as the 1980s, the company extended its accumulated ceramic firing technology from sanitary ceramics into the semiconductor field. Its core product, the electrostatic chuck (used for securing wafers during chip manufacturing), relies on high-purity ceramic craftsmanship for durability, forming the backbone of its technical moat. In addition, TOTO is differentiated by its expertise in aerosol deposition—a process that forms a coating by directly spraying fine ceramic particles, applicable to various stages of semiconductor manufacturing.

However, the business has not always been smooth. After years of losses, it was only around 2020—when AI semiconductor demand surged—that this segment experienced a turnaround and ultimately surpassed the bathroom business to become the company’s top profit driver. Although the new business segment accounts for only about 10% of TOTO’s total revenue, its profitability has far outstripped that of its traditional bathroom equipment operations.