The artificial intelligence boom is reshaping the global supply chain in unprecedented ways, unexpectedly benefiting even Japanese manufacturing titan Toto, renowned for its bathroom fixtures, due to its discreet semiconductor materials business. On Thursday, the stock surged as much as 11% in the Japanese market, marking its largest intraday gain since February 2021. This followed analysts at Goldman Sachs upgrading their rating on the company, citing how AI infrastructure development is tightening the supply of NAND flash memory chips, thereby boosting demand for a key chip manufacturing component produced by Toto—electrostatic chucks.

This market reaction underscores the profound impact of AI data center expansion on the upstream supply chain. Goldman Sachs analysts Sachiko Okada and Sayako Tominaga noted in a report that the tight supply-demand environment in the memory sector will act as a tailwind, anticipating that Toto's chuck manufacturing business will deliver "significant profit growth." A Toto representative also confirmed expectations that the ongoing construction of AI data centers will further drive up demand for its electrostatic chucks. This significant stock movement not only made Toto the best-performing stock in the ceramics sector during Thursday afternoon trading on the Tokyo exchange but also highlighted the deep-rooted expertise of traditional Japanese consumer goods manufacturers within the semiconductor field. Beyond Toto, several other Japanese firms, including Ajinomoto Co., the inventor of monosodium glutamate, and cosmetics company Kao Corp., are deeply embedded in the global chip supply chain through cross-industry technological applications. AI-Driven Hidden Champions Although globally famous for its warm-water washing toilet seats, Toto has been a significant player in the semiconductor and display supply chains for decades. Data compiled by Bloomberg shows that for the fiscal year ending March 2025, the company's new domain business accounts for 42% of its total operating revenue. The product in focus is the electrostatic chuck, which Toto began mass-producing in 1988. This device utilizes electrostatic force to hold objects and is primarily used to secure silicon wafers during chip manufacturing, while also helping to control temperature and prevent contamination. Goldman Sachs analysts raised their rating on Toto from "Neutral" to "Buy." The analysts believe that as the supply of both high-end and commodity memory chips tightens, Toto's electrostatic chuck business will directly benefit from the wave of AI infrastructure construction. The Ripple Effects of Global NAND Supply Tightening Currently, tech giants like Meta Platforms and Amazon are investing hundreds of billions of dollars in building data centers to support AI services, triggering widespread shortages of semiconductor products. This demand surge is prompting global memory chip makers—including SK Hynix, Samsung, and Kioxia Holdings—to ramp up production, which directly increases demand for products from upstream suppliers like Toto. Fine ceramics, while similar in material to the sanitary ceramics used in Toto's bathroom products, possess strength comparable to metal. Compared to metal, ceramics are lighter, can withstand higher temperatures, and do not electrically interfere with chip manufacturing equipment. Although their primary drawbacks are greater brittleness and higher cost, their physical properties are crucial in the high-precision environment of chip manufacturing. The Cross-Industry Dividends for Japan's Traditional Manufacturing Toto is not the only Japanese consumer goods giant benefiting from the chip boom. Japan's long history in chip production has led many seemingly unrelated companies to establish semiconductor-related businesses. For instance, Ajinomoto Co., the inventor of MSG, leverages its expertise in amino acids to produce essential chip insulating film (Abf). Cosmetics company Kao, which sells facial cleansers, also operates a business cleaning semiconductor wafers. During Thursday's market trading, Toto's rise was accompanied by a broad rally in AI-related stocks. OpenAI investor SoftBank and chip equipment maker Disco both saw gains exceeding 10%. This trend indicates that investors are delving deeper into the supply chain, searching for undervalued assets poised to gain from the global computing power arms race.