YAC Holdings: Yield, Automatic, Control

Now is considered an interesting time for Japanese manufacturing. Due to geopolitical reasons, many large supply chain disruptions have emerged, creating tension between nations and forcing many companies to look at onshoring their critical production. This has been positive for Japan in terms of boosting its exports of equipment and materials, but has also enabled the country to position itself as an alternative chip production hub, something we’re seeing with Rapidus and TSMC’s expansion. Do you feel that now is an opportune time for Japan to expand internationally?

To be completely honest, we aren’t really feeling the positivity you mentioned. This is due to the fact that our strategy until now has been focused on a specific counterpart company, and therefore, we weren’t applying our technology horizontally and finding new sales channels. By changing our mindset and being more open to finding new clients with our existing technology, we hope to trickle down the effects of this advantageous situation.

As alluded to, your company recently announced a new mid-term strategy. There is an interim step that takes you to 2027, with the long-term goal of 2030 and achieving JPY 100 billion in revenue. To that end, you have reorganized your historical divisions into three key pillars: semiconductors and mechatronics, environmental infrastructure, and medical. Why do you think that reorganizing your corporate group was important, and what benefits will it bring to YAC Holdings?

YAC used to have many diverse business divisions, and investors pointed out that it was hard to understand what YAC was doing, so we decided to define our businesses clearly into three labeled categories.

ULVAC is a good case study, as while they have many different businesses, at its core, it's vacuum technology. Tokyo Electron is another huge company, yet at the center is deposition technology. YAC was in a situation where it was difficult to pin down exactly what the core technology of your business was. How did your company evolve this way? What is it that allows you to provide mechatronic equipment to such a wide variety of sectors?

I am the founder of the company, and prior to that, I was working as an engineer for a company called Kokusai Denki, which at the time was providing semiconductors used in color TVs. Shortly after, there was a huge dip in demand for color TVs, followed by the Nixon Shock, which greatly reduced demand for semiconductors. Before these shocks, turnover was about JPY 13 billion, but post shocks, dropped down to JPY 3 billion. There were 37 engineers in Engineering Department No. 4, almost all of whom were seconded to subsidiaries. Halfway through my two-year contract, I decided to let myself go and form my own company.

Usually, when an engineer starts a business, there is a new technology around which they base their business. My case has not been like this since I started my company based on the restructuring of my former employer. In the beginning, YAC had four architects, both mechanical and electronic. We started off designing drawings and plans for electronics and mechatronics, but that approach did not make much money. It was from this point that we decided to start manufacturing.

With our manufacturing, we didn’t choose the jobs we took; rather, whenever we got an offer, we would jump at the chance to produce, which is what led us to learn and develop new technologies.

You mentioned the cyclical nature of the semiconductor field, and the sector has seen a downturn over the last two to three years, but now we are entering an era that is expected to be marked by explosive growth. Industry insiders believe semiconductors will balloon to a USD 1 trillion industry by 2030 on the backdrop of new applications such as generative AI, power semiconductors, 5G, and quantum computing. How is YAC positioning itself to leverage the sector’s growth? Which of your products or divisions do you believe will allow you to capitalize on this booming market?

By analyzing the companies that have been successful, it becomes apparent that each company has its specific strengths. To achieve our mid-term plan of JPY 100 billion turnovers, we are now concentrating our resources on power semiconductors so that we can create multiple high-profit-making businesses. Specifically speaking, we hope to achieve JPY 10 billion worth of businesses in eight different categories. While we are placing an emphasis on power semiconductors, we also see medical as the most emerging and potential business.

For power semiconductors, products include silicon carbide handlers and cleaning devices. For some of our products, we do have a 100% contract with a very famous Japanese electronics manufacturer, and for our wafer cleaning devices, we have contracts with other major Japanese firms. It now comes down to how to horizontally apply and find new clients with our existing technology.

IBGT annealer: This is an ion beam annealer used in the power semiconductor manufacturing process.

To achieve JPY 100 billion in net sales, we are creating core businesses that would account for over JPY 10 billion, including the laser anneal machine, the silicon carbide chip handler, and the wafer cleaner. These three major fields are within the power semiconductor sector, which is emerging, and therefore, we see growth.

Japan still has relatively competitive companies in the power semiconductor field. In this field, we are seeing a change in substrates, with the functionalities of silicon for certain high-power applications being divested into what we call compound semiconductors, including silicon carbide, gallium nitride, and others. These new substrates have different physical properties and architectures in comparison to silicon wafers. One of them is that they tend to be a lot smaller and a lot more brittle. How are those new technologies and substrates impacting your product development strategy? Can you share with us what you believe will be the standout products in this particularly growing field?

We are closely analyzing the situation. Power semiconductors are needed in high-power and high-heat applications. Based on our close analysis, we are trying to develop technology that would cater specifically to emerging power semiconductor technologies.

You also alluded to hard disk technologies as one of the core avenues for growth. From our research, we saw that YAC Mechatronics is the global leader in burnishing equipment for hard disks and has a 100% market share. Hard disks have grabbed a lot of attention in recent years because of their utilization in data centers, particularly as an effective way to have an electromechanical storage unit. Where do you see growth coming from in your hard disk business in terms of applications? Do you think this will be driven by legacy applications or more by new industries like data centers?

We see growth in data centers for our products, and we have high expectations. Compared to flash memory, new emerging data centers require massive data storage, and hard disks require space due to heat dissipation, so although the space requirements might be seen as a downside, the huge amount of storage that hard disks offer tells us that the demand will continue to rise. This is particularly true with some companies looking to do big data analysis, and this puts us in a great position since we have a  100% market share in burnishing technologies.

Are you not concerned that a competitor might emerge in the field? What allows you to protect this 100% market share?

We believe that our market dominance is the result of our ability to develop burnishing equipment at about the same time that our customers are producing hard disk media, and to update specifications in a timely manner.

I would like to talk a bit about the medical field now. Medical is, in fact, the biggest expectation for growth among our business pillars. We have three major themes, the first of which is dialysis machines with Nipro in Osaka. Nipro has a target to become a JPY 1 trillion company by 2030, and in 2022, it was about JPY 450 billion. Their target is to quadruple their dialysis machine production, and we are partnering with them to help them enhance their production. The scale of business with Nipro is currently approximately 5 billion yen.　We see this as a very promising and stable business with the potential for a huge leap in profitability.

The second major theme is collaboration with medical-related companies in the U.S., working with them to provide services to detect diseases from hair.  The thickness of the hair is between 30 and 80 microns, which is cut vertically by a device we have developed. We refer to this as 「KATANA」, and it was developed at the request of a national university.  Executives from Linus Biotechnology, our collaborator, came to Japan looking for technology to cut hair and found this device and our technology.  

In December 2022, I went to New York to sign a contract with Linus Biotechnology to develop a device to automatically cut hair. This led to a capital alliance, and today we are jointly engaged in Linus' hair-based disease diagnosis business.

Actually, Linus Biotechnology has already started business in the US and will be taking care of the Middle Eastern and European markets. We have formed a joint venture and will begin serving them from Japan. This is why we recently established a joint venture to start the service, beginning with Japan.

We provided Linus Biotechnology with the hair mounters and slicer , but we felt that it wasn’t interesting enough for us, so we established a joint venture to provide the service. By consumable, I mean that each person’s hair is placed on a different plate, and that plate is provided by us as the consumable part. Conventionally, you would have to take a blood test to determine the possibility of certain diseases but with this new technology, you just need to cut some hair, making it better for children or those with a low tolerance to pain. In the US, it is said that 3% of the population has autism, but in order to determine if a child is autistic, you have to wait until they are four or five years old. With hair, however, you are able to determine once they are born. According to some , the brain is already formed at two years old, so if autism can be detected earlier, treatment can be given earlier. For example, if we can accumulate data for about 5,000 people, AI can perform deep learning  and automatically detect autism. This doesn’t just apply to autism either, and the technology can be applied to detect all sorts of disorders, including cancer.

Apart from our hair-based disease diagnostic services business, we also have a measuring device that can detect any protein-based disease marker, which we just presented at a medical exhibition in November 2024. We began by using blood to detect disease markers of dementia.  Dementia was the target since Japan has some of the highest numbers of dementia sufferers in the world. The development of this device, NeuroDetect, was triggered by a joint research project in partnership with the New Energy and Industrial Technology Development Organization (NEDO). The initial purpose was to detect whether a person working in a food factory has a virus or not by sampling their saliva. COVID-19 hit, and research stagnated. We wanted to apply this technology to COVID-19 but could not finish it in time. However, in the course of research and development, it was found that the system can measure disease markers in the blood with high sensitivity.

Recently, Eisai, the Japanese pharmaceutical company, has developed a drug for dementia which has become a sensation. There have since been many discussions on how to determine the level of dementia that a person has. Devices to measure disease markers for dementia exist around the world, but they are quite expensive. You also need an expert to operate the machine. The sensitivity of new equipment, which we announced in November 2024, is 100 times greater than that of the device currently in use. The cost is also much lower, and anyone can operate it. Once it is launched, I think it will revolutionize the market. We have already started receiving orders, so we hope to launch soon.

Dementia is scientifically determined by the amount of protein that consists in the brain. We believe that with our device we can measure disease markers for dementia and determine the degree of dementia. Combined with AI analysis, this allows for rapid diagnosis.　The first phase would see us launching this product in hospitals and research institutes, but my vision in the future is to have these in every drugstore so that more personalized detection can be done. We also believe that the sale of equipment and reagents will be a business model similar to that of a copier and toner, for example.

While fully automatic hair mounter and slicer device “SAMURAI” was a collaboration, you’ve explained that Neuro Detect was developed in-house. What specific technology allowed you to develop this device, considering you said that it is 100 times more accurate and costs less?

There is a long-time research advisor at The National Center for Geriatrics and Gerontology (NCGG) Longevity Institute in Japan. By receiving advice from him, we developed our own technology. Unlike medical device developers, we are not limited in our mindset, and we try to accommodate all requests. With this mindset, we are able to be more flexible, particularly by combining existing technologies to create new synergies. This technology was produced by chance in such an environment.

Fully automated high-sensitive digital immunoassay system “NeuroDetect"

You mentioned that with Linus Biotechnology, things started with the technology and the consumables, and since you have expanded into services. This is a radically different business from the core of your enterprise, which tends to be focused on equipment. B2C businesses require different marketing, branding, and human resources. How are you preparing yourself for such a big change away from your comfort zone?

Our goal for our 100th anniversary is to become a JPY 3 trillion company, and we have 49 years left to achieve this. Getting to this goal through B2B alone is not possible, although I would say that getting into this B2C business was a happy coincidence. With this in mind, we would like to strengthen our role as a hair-based disease testing service provider in Japan.  

On the other hand, NeuroDetect, a fully automated, high-sensitivity digital  immunoassay system, can detect any disease , basically any  disease marker, by changing reagents. With this technology, the applications are immense. The semiconductor field fluctuates, so from a management point of view, it is important that we have stable income through mass production. This is why we’ve been looking for a good product we can mass produce, which happens to be in the medical field.

Are you hiring to increase your capabilities in the service field?

The joint venture with Linus Biotechnology will start with our company sending the hair from Japan for analysis in the US. We are, however, in discussion of setting up a lab in Japan to begin commercialization by having testing facilities. We are also in talks with hospitals and research agencies so we can acquire hair for analysis.

Recently, you announced a two-to-one stock split that will take effect in January 2025. This will make the company’s shares more liquid, making it easier for investors to buy those stocks. Why is enhancing your investment base important now?

We decided on this stock split because we have about 9.7 million stocks issued, which is quite low.  In order to increase liquidity, we decided to split the stock.

As you look back on your career so far, is there a moment, product, or milestone that you are most proud of? What is something you wished you had done differently?

Ever since the 10th anniversary of my company, I’ve been contemplating what the mission of YAC is. I realized that YAC has been nurtured by society, so our mission is to give back and make contributions to that society that shaped us. Firstly, I want to elevate the lives of our employees by providing economic happiness and peace of mind. I also want to pay high taxation to local governments. The tax system supports many things in Japan, which is why I consider paying high taxes to be the core mission of the company.

For more information, please visit their website at: https://www.yac.co.jp/en/index.html