Investor says toilet maker Toto is an overlooked AI play

"The AI hype cycle has officially reached the toilet, with a Japanese bathroom giant suddenly being pitched as a serious tech play. Activist investor Palliser Capital has taken aim at Japanese loo legend Toto, urging the firm to make more noise about its little-known chip components business and arguing the maker of the "Washlet" - described by the company as "the original shower toilet" - is quietly sitting on a flush of value tied to the AI boom."

"The UK-based fund says the company's advanced ceramics arm produces electrostatic chucks used in cryogenic etching tools for 3D NAND manufacturing - niche but essential kit that helps hold silicon wafers steady. The ceramics are designed to remain stable at extremely low temperatures, helping to clamp wafers in place as memory chips become increasingly layered and finicky. Palliser argues the business is central to next-generation chip production and says the segment now contributes more than half of operating profit,"

"With AI infrastructure spending still in full froth, it seems anything with even a whiff of exposure to memory chips is being hauled into the spotlight. Palliser reckons Toto's valuation gap is largely down to investors not fully appreciating what's going on behind the bathroom door, putting the disconnect at about ¥554 billion ($3.6 billion). The fund says fixing disclosure, tightening capital allocation, and improving capital efficiency could unlock "well over 55 percent upside""

Palliser Capital has taken a top-20 stake in Toto and is urging the company to emphasize its chip components business. Toto's advanced ceramics arm produces electrostatic chucks used in cryogenic etching tools for 3D NAND manufacturing, providing stable clamping of silicon wafers at extremely low temperatures as memory chips become more layered. The ceramics segment now reportedly contributes more than half of operating profit. Palliser estimates a valuation disconnect of about ¥554 billion ($3.6 billion) and contends that improved disclosure, tighter capital allocation, and greater capital efficiency could unlock substantial upside amid rising AI-driven memory demand.

Read at Theregister