Japan Markets ViewMachine Tool Demand and FA Manufacturer Opportunities Driven by Data Centers and AI
Oct 20, 2026
[Tetsutaro Abe, QUICK Market Eyes] Capital investment appetite in the manufacturing industry is recovering. According to trends in orders of machine tools compiled on October 9 by the Japan Machine Tool Builders’ Association (JMTBA), final figures for August showed sharp growth. Orders surged 64.7% year-on-year to JPY197.8 bn. Driven by the expansion of AI, demand remained solid for backup power supplies and cooling equipment for data centers, semiconductor manufacturing equipment, and robots. In addition to the strong aerospace sector, orders for automobiles and infrastructure also pushed up total demand. Preliminary metal cutting machine tool orders for September increased by 60% year-on-year to JPY223.2 bn, reaching a record high level.
Robust machine tool orders are likely to provide a strong tailwind not only for machine tool makers but also for factory automation (FA) manufacturers that supply control systems and key motor components. Machine tool orders are closely tied to the business performance of FA manufacturers such as FANUC (6954) and YASKAWA Electric (6506). Machine tools are equipment used to process metals and other materials. FA equipment, such as computer numerical control (CNC) systems and servo motors, is essential for controlling and driving them. When orders for machine tool makers increase, orders for FA manufacturers supplying components for that machinery expand in tandem.
Financial results of Yaskawa Electric for the period from March to August 2026 under International Financial Reporting Standards (IFRS), announced on the same day, demonstrated solid order trends. Orders for the period rose 38% year-on-year. On a quarter-on-quarter basis, orders were up 13% to JPY185.4 bn, setting a new quarterly record. The Motion Control segment, which includes AC servos and drivers for semiconductors and data centers, drove overall performance. In the Robotics segment, orders also remained solid, with a focus on semiconductors and general industries.
Market attention is also likely to focus on FANUC’s financial results for July-September 2026, scheduled for release after the market close on October 23. In the consolidated financial results for April-June 2026 announced at the end of July, net sales rose 18% year-on-year to JPY231 bn. Operating income increased 26% to JPY53.5 bn, representing increases in both revenue and profit. Orders surged 37% to JPY281.9 bn, setting a quarterly record high.
In the FA Division, orders grew 64% due to increasing demand for AI servers and semiconductors. In the Robomachine Division, orders also expanded significantly by 98%. Procurement delays for components have led to longer delivery times, creating a time lag between orders and sales. However, backed by a strong demand environment, the company revised upward its full-year earnings forecast for the fiscal year ending March 31, 2027.
In the stock market, expectations are rising for “physical AI,” in which robots and machine tools operate autonomously. On the other hand, stock prices of FA manufacturers are seen as lagging behind. FANUC has received numerous inquiries and business leads from customers. Its technology, which can handle objects of various shapes without prior programming, is highly rated. While many projects are currently in the proof-of-concept stage, management expects them to lead to concrete orders and transition into full-scale demand expansion. Although noting that its robot production capacity still has leeway, the company is reportedly considering constructing new buildings on land already secured as an option if demand surges due to the widespread adoption of physical AI.
Analysts, including Kentaro Maekawa at Nomura Securities, issued a report following the release of the recent machine tool order data. They noted that optimism is not fully warranted as concerns about slowing momentum across the overall capital investment cycle remain. However, with machine tool orders remaining stronger than expected, they suggested that stock prices of FA and machine tool companies could be reassessed in the very short term. Stock price corrections are expected among lagging FA manufacturers, driven by robust order intake and a broad-based rally in Japanese stocks.
(Reported on October 13, 2026)
Discover datasets unique to the Japanese equity market
Visit QUICK Data Factory: https://corporate.quick.co.jp/data-factory/en/
Disclaimer
https://corporate.quick.co.jp/en/terms/#disclaimer
Follow us on LinkedIn to stay updated with Japan Markets.
