Buying Toto🚽 stocks is better than cryptocurrencies.

Toto (the largest bathroom company, known for its smart toilets) stock recently surged, mainly because the market suddenly discovered its "hidden AI-beneficial business"—the Advanced Ceramics division, especially the electrostatic chucks (ESC) used in semiconductor manufacturing.
How does its ceramic technology contribute to AI?
Toto has been mass-producing electrostatic chucks (ESC) since 1988. These are highly precise ceramic components critical in semiconductor etching equipment, used to "hold" silicon wafers, ensuring they remain perfectly stable, non-moving, and free of contamination in vacuum chambers.
AI requires massive amounts of high-layer-count 3D NAND flash memory (used in data centers for storing training data, model parameters, etc.). When producing advanced 200+ layer 3D NAND, extremely deep and narrow "channel holes" must be etched into the wafers: about 10μm deep and only around 100nm wide, with a high aspect ratio of 100:1.
Traditional room-temperature etching often causes holes to become skewed or clogged. Cryogenic dielectric etching (-70°C to -100°C) is the solution:
• It "freezes" the reactive gases on the sidewalls, creating a protective layer that only allows ions to attack the bottom, resulting in straight holes.
• However, the temperature must be extremely uniform (a difference of just 2°C can ruin yield). This is where Toto's ceramic chucks excel—they use special low-temperature-resistant, high-plasma-tolerant alumina ceramics with built-in heating/cooling channels, maintaining wafer temperature uniformity even under high-power plasma bombardment.
Toto is a major ESC supplier for Lam Research's cryogenic etching tools (Vantex series), a leading semiconductor equipment manufacturer. Lam's customers include Samsung, SK Hynix, Micron, etc., all expanding rapidly due to AI demand. About 80% of Toto's business is "replacement consumables" (chucks need replacing roughly every year), and 20% is new equipment/upgrades, representing stable, high-margin recurring revenue.
Palliser estimates: as NAND quickly advances from 200 to 300-400 layers, Lam's cryogenic equipment installations could triple in the next 3-5 years, and Toto's ceramic division could see over 30% compound annual growth in revenue over the next two years.
How did Palliser Capital notice this?
Palliser is an aggressive hedge fund focused on finding "value stocks overlooked by the market" (its founder previously worked at Elliott Management). During deep fundamental research, they discovered:
• Toto's core bathroom business is mature with slow growth, yet it invests heavily in low-return real estate-related businesses.
• The ceramic division has an ROA (return on assets) of 34.2%, far above the cost of capital, but only accounts for 11% of capital expenditure, with disclosures limited to a one-page investor presentation.
• Meanwhile, AI memory demand is exploding, and Lam Research's stock has surged 136% over the past year, but Toto has almost not been revalued.
So they bought the stock and prepared a detailed presentation (Value Enhancement Plan), publicly urging Toto to:
1. Significantly improve transparency of the ceramic business (clarify market share, technological moat, AI-driven growth).
2. Allocate more capital to the ceramic division, using cash (net cash of about ¥7.6 billion) to buy back shares or expand production.
3. Sell cross-shareholdings to optimize capital structure.
Palliser believes Toto has a technological moat of over 5 years (with a very long design validation period, competitors still cannot replace it), and as long as the story is clearly communicated, the stock will be revalued. This is the key reason they "noticed" it—not a sudden discovery, but a systematic uncovering of an undervalued "invisible champion" in the AI supply chain.