Rohm is Japan's largest independent producer of semiconductors. Obscured by news about the fate of Toshiba and its NAND flash subsidiary Toshiba Memory, Rohm reported excellent results for the three months to June - sales up 16% and operating profit up 80% year-on-year - supported by Strong Demand from the auto and industrial sectors and from Nintendo. In A Brief Analysis Of The Current Semiconductor Growth Cycle, William Keating notes that Automotive and Industrial are projected to be the fastest growing segments of the semiconductor industry from 2016 - 2021, with CAGRs of 7.5% and 7.0% respectively. These are the segments that have driven Rohm's business for the past decade and that should continue to do so in the years ahead.

Rohm's share price hit bottom at ¥2,157 in FY Mar-13, when the JPY peaked at a fiscal year average of 79/USD and the company reported both a small one-time operating loss and substantial impairment charges.  It has since rebounded to ¥8,560, exceeding the highs reached before the floods in Thailand but short of those reached before the collapse of Lehman Brothers. The long decline in the share price following the peak of the internet bubble was caused by over-dependence on Japan's failing consumer electronics industry. That problem has been solved.

Potential catalysts for further share price appreciation include above-guidance profit growth driven by strong demand from the auto, industrial and (for the time being) game sectors, and high capacity utilization. Potential risks include macro-economic decline and JPY appreciation. Relatively low ROE caused by substantial fixed assets and cash on the balance sheet may be a concern for some investors. A ¥11,000 share price target indicates upside potential of 28.5%.

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