Toshiba reported a strong start to FY2026, with first-quarter net sales rising 27% year-over-year to ¥937.1 billion from ¥737.9 billion. Operating income increased to ¥111.9 billion from ¥40.1 billion, nearly tripling, while return on sales (ROS) expanded sharply to a record Q1 level of 11.9% from 5.4%. EBITDA reached ¥136.5 billion, more than doubling from ¥65.2 billion, with the EBITDA margin improving to 14.6%.
Growth was broad-based across Toshiba’s Energy, Digital Infrastructure, and Devices & Technology businesses, as well as Retail & Printing. Of particular relevance to the semiconductor market, Devices & Technology recorded higher sales in both HDDs and semiconductors. Toshiba said these businesses benefited from robust data-center demand associated with the rapid adoption of generative AI. Transmission & Distribution, Thermal Power and Industrial Systems were also identified as areas benefiting from the data-center investment cycle.
The results suggest Toshiba is gaining exposure to AI infrastructure through several layers of the value chain rather than through semiconductors alone. Rising data-center electricity requirements are supporting its power and grid infrastructure businesses, while AI storage requirements are benefiting HDD operations and semiconductor demand. This combination gives Toshiba exposure to both computing infrastructure and the electrical systems required to support expanding data-center capacity.
Operating performance also benefited from management reforms, including pricing measures, improvements in marginal profit and reductions in fixed costs. Toshiba said these measures, together with higher sales, contributed to increased operating income across all business areas. The company is targeting a group-wide ROS of 10% for FY2026 under its Toshiba Revitalization Plan.
Net income surged to ¥4.467 trillion from ¥146.9 billion a year earlier. However, this extraordinary increase was predominantly driven by non-operating income associated with the valuation of Toshiba’s Kioxia shares rather than underlying operating performance. Income related to Kioxia reached ¥6.329 trillion during the quarter, compared with just ¥6.1 billion in Q1 FY2025. This distinction is important when assessing the underlying improvement in Toshiba’s core businesses.
Free cash flow increased to ¥617.3 billion from ¥262.7 billion, supported by improved operating cash flow and investing cash flow, including proceeds associated with Kioxia shares. Meanwhile, orders remained strong, particularly in the Energy business, and Toshiba’s order backlog reached its highest level since the company began the current disclosure format in FY2018.
For the power semiconductor industry, the most important takeaway is Toshiba’s explicit identification of data centers and generative AI as drivers of strength across semiconductors, industrial systems, transmission and distribution, and power-generation equipment. The results reinforce the broader trend in which AI infrastructure investment is propagating beyond processors and memory into power semiconductors, power conversion, grid equipment and supporting electrical infrastructure. Toshiba plans to accelerate investment and commercial activity around Energy, Data Center, Physical AI and Defense as it seeks further growth from FY2027.
Original – Toshiba