A long-running side bet

The product behind all the excitement is called the electrostatic chuck. It is a flat ceramic device that holds a silicon wafer perfectly still during chip manufacturing. Inside an etching or deposition chamber, the wafer is held in place by an electric field rather than by any mechanical clamp, which keeps it free of vibration and almost free of contamination. Without a good chuck you cannot make a good chip. The components are highly engineered, must withstand plasma and thermal stress, and are made to extremely tight tolerances.

Toto began mass-producing electrostatic chucks in 1988. For most of the decades since, this was a quiet, profitable corner of a company that the public knew only for bathrooms. The connection between sanitaryware and chip-making is less surprising than it sounds. Both depend on the same underlying craft, which is the precise control of advanced ceramics: the chemistry, the moulding, the firing, the surface finishing, all carried out at very high quality. The same know-how that produces a flawless ceramic basin produces a flawless ceramic plate for a semiconductor fab.

What has changed in 2025 and 2026 is the demand. The global build-out of AI data centres has put unprecedented pressure on memory chip suppliers (which make flash memory), including Toto's customers in Korea and Japan. The supply-demand balance for flash memory has tightened, fab utilisation has risen, and orders for the equipment and components that go inside those fabs, including electrostatic chucks, have followed. Toto's advanced ceramics business, which only a few years ago was a footnote in the company's reporting, now contributes more than two-fifths of its operating profit. The company has committed roughly one hundred and ninety million US dollars of additional investment to the business, and is openly telling investors to expect record profit again in the next financial year.

A pattern, not a one-off

If you look across Japanese industry, Toto's story is part of a wider pattern in Japan. Fujifilm is the example most familiar abroad. When demand for camera film collapsed in the 2000s, Fujifilm reached into the science behind film, in particular its expertise in collagen, antioxidants, and nanoscale layering, and used it to launch the Astalift cosmetics line in 2007. From there it moved into pharmaceuticals, regenerative medicine, and semiconductor materials. While its great rival Eastman Kodak filed for bankruptcy, Fujifilm grew.

Ajinomoto is another. The same chemistry that gave the world monosodium glutamate produced, in the 1990s, an unusual resin by-product. Refined and engineered, it became Ajinomoto Build-up Film, the insulating layer used in the package substrates of almost every high-end CPU made today. The company best known for a kitchen seasoning supplies a material with close to a hundred per cent share of its market, and has announced plans to invest more than twenty-five billion yen by 2030 to expand capacity.

JSR Corporation, which began life in 1957 as Japan Synthetic Rubber, used its polymer expertise to enter the photoresist business in 1979. Today it is one of the world's leading suppliers of the light-sensitive chemicals that pattern circuits onto silicon, including the most advanced photoresists used in EUV lithography. The same company that once made the chemistry of tyre rubber now sits at the heart of cutting-edge chip-making.

The pattern, in each case, is the same. A Japanese company with deep technical know-how in one field discovers, sometimes by design and sometimes by happy accident, that the same know-how is unusually valuable in an adjacent field. It commits patiently for years, often for decades, before the outside world notices. And then, when conditions change, the slow-burn business suddenly becomes the headline story.

Where intellectual property comes in

This is where the legal side begins to matter. A pivot of the kind Toto has made is not protected by good engineering alone. It is enabled and protected by a deliberate intellectual property strategy. There are several reasons for this.

The first is that patents protect the bridge from one industry to another, not just the original invention. Toto's earliest electrostatic chuck patents were filed in Japan in the late 1980s, and in Europe shortly afterwards. Those patents have, of course, long since expired. But the modern Toto chuck portfolio is fresh and substantial. The early patents secured the company's position as the field was forming. The newer patents secure its position as the field expands. A pivoting company cannot rely on the patents that protected its old business. It has to keep building protection in the new one.

The second is that careful patent landscaping helps a company decide where to pivot in the first place. By looking at what patents already exist in a candidate field, a company can see who the entrenched players are, where the white space lies, and how crowded the route from research to product is likely to be. Fujifilm's transformation under Shigetaka Komori is reported to have begun with a systematic audit of the company's own patents alongside a parallel review of where the world's technology was heading. The match between the two is the heart of any successful pivot.

The third is that, once a company has chosen its new direction, it needs to file in surrounding areas as well: materials, processes, equipment, and end-uses. The reason a competitor cannot simply copy Toto's chucks, or Ajinomoto's films, is not only that the underlying recipes are hard. It is that the company has filed enough patents around the core technology to make life very difficult for any imitator. Adjacent patenting is what turns a single clever invention into a defended commercial position.

The fourth is that patents are not the whole answer. Process recipes, sintering profiles, contamination controls and many other pieces of manufacturing know-how are often better kept as trade secrets and never published at all. A sound IP strategy makes a deliberate choice about what to disclose in a patent, accepting twenty years of protection in exchange for public disclosure, and what to keep secret indefinitely. For a company in the middle of a pivot, this choice is particularly delicate. Publishing too early can broadcast a new direction to competitors well before commercial launch. Publishing too late means the field may already be staked out by others.

The fifth and final point is that European patent protection matters even when the customers, the fabs, and the growth are mostly in Asia. A European patent gives its proprietor the right to stop infringing products being imported into the major European markets, and the right to use that leverage in cross-border commercial negotiations. A company that intends to be a global supplier needs global protection.

The craft’s reward

There is something fitting about the way Toto's pivot has been received. For decades the company quietly perfected the same underlying craft, the chemistry and physics of advanced ceramics, and applied it in two very different worlds. The bathroom business gave it scale, cash flow and a household name. The semiconductor business has now given it, in 2026, a place at the centre of the AI economy. Neither would have worked without the other. And neither would have worked without the long, careful, often unglamorous patenting that turned a piece of know-how into a defensible commercial position. That is monozukuri meeting modern intellectual property strategy, and the result is the kind of share-price story that makes the rest of the world look up.

For any Japanese company thinking about its own next pivot, the questions are largely the same ones Toto faced thirty-five years ago. Where else does our core technology solve a problem worth solving? Who already holds patents in that field, and where is the white space? What should we file, and what should we keep secret? Where in the world do we need protection? These are not easy questions, and the answers usually take years to play out. But, as Toto's recent share-price chart suggests, they are very much worth asking.

If you would like to discuss any of the IP issues raised in this article, please contact the author or any member of the D Young & Co LLP team.