If you have traveled to Asia to countries like Japan, China or Singapore, it is possible that along your journey you have put your butt on a smart toilet. And it is also likely that that smart toilet was from the TOTO brand. The Japanese firm is famous mainly for its toilets, but the fact that its core is china allows it to be on the front page in the midst of the AI boom and that is not so well known: it has been in the chip business since 1984, manufacturing high precision ceramic components employed in semiconductors.
It is not NVIDIA or AMD, but to give us an idea of how serious Toto is and its level of competition, it has just invested a fortune with one goal: to scale its production to the most advanced one-nanometer chips. It should be remembered that IBM just achieved the first chip of that very small size.
Towards 1nm chips. Already in February the Pallister Capital fund (one of the largest shareholders of Toto) qualified to a company as “the most undervalued and overlooked beneficiary of AI memory”, highlighting that its chip component manufacturing segment already accounts for more than 50% of its profit.
What he also blamed on the Japanese company is the lack of transparency. A few months later, Toto has picked up the gauntlet: just announced an investment of $495 million over five years to scale its business to the most advanced technological horizon in the chip industry: supporting next-generation manufacturing technologies in the nanometer range.
Why is it important. The rise of data centers and AI is fueling demand for advanced semiconductors in search of increasingly smaller and more efficient chips. Without advanced materials like those made by TOTO, the miniaturization needed for one-nanometer technology would not be possible.
And this diversification is very profitable for Toto. Nikkei Asia collects its astronomical projected figures for this segment: operating profit of 27,000 million yen (146 million euros) for the fiscal year ended in March 2026, an absolute historical record and 32% more than the previous year. It is already what makes the most money for the toilet company. At the state level, this investment is part of Japan’s effort to strengthen its domestic semiconductor supply chain in a context where several countries wish to reduce their dependence on Taiwan and South Korea.
Context. Toto began research in the field of advanced ceramics in the 1970s, as Japan’s period of rapid post-war growth was winding down. As relates Toto ceramics business planning department manager Junji Kameshima said, “We wanted to use our ceramics experience to create high-value products.” In 1984 that area was officially established and in 2020 it went from artisanal and low-performance production to playing in the first division. The jump was thanks to Nakatsu’s highly automated plant, with AI systems trained to detect minimal defects: it went from a performance of 50-60% to more than 90% and delivery times were reduced from 180 days to just over 40.
Its product portfolio within the semiconductor area was consolidated around three main products: the most important are e-chucks, ceramic discs that hold the silicon wafer during the etching of NAND memory chips. The second are aerosol deposition components, which protect internal walls of the etching chambers. The third are highly durable structural parts used in large LCD panel manufacturing equipment. The three take advantage of a skill acquired making ceramics for the bathroom: ceramic firing of high precision and purity.
In detail. This investment of 495 million dollars over five years has three specific lines of action:
- Expand the machinery at its Oita and Fukuoka plants, already operating at full capacity.
- Reorient R&D at its Kanagawa plant toward logic semiconductors.
- Build a new cooking building in Fukuoka, scheduled for January 2027.
Part of the investment has already been decided, but the rest will be available depending on market conditions. Thus, if the demand still cannot be met, Nikkei Asia leaks that Toto will consider the construction of a new plant from scratch.
Yesyes, but. It seems that days of wine and roses are coming for Toto, based on its solid figures, but there are aspects to take into account. The first is that NAND memory already collapsed a few years ago and could do it again before the Japanese company recovers the investment. On the other hand, this optimistic speech comes from Pallister, one of those interested in Toto doing well (he is an investor). Also, Toto has very few large clients, so a slowdown from any of them can be a severe blow.
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Cover | Toto and Igor Omilaev
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