Sumitomo Electric Industries (5802.T): Conf. takeaways: Optical device output normalized, set to improve in 2Q; valuation attractive; Buy

On September 18, 2026, Goldman Sachs hosted a group call for investors with Fumihiro Kawano, General Manager of the IR Office at Sumitomo Electric Industries (SEI). Although SEI's 1Q results were favorable overall, the market reacted negatively to weakness in the infocommunications segment, which was mainly caused by a temporary shutdown of an optical device plant for construction work and equipment problems that reduced yields; these issues have been resolved and production normalized during 1Q. Due to the long manufacturing lead time, 2Q shipments will still be impacted and sales will be slightly below initial expectations, but shipments have normalized and, given the high marginal profit ratio for this product group, we expect improvement from 1Q to 2Q. Demand remains strong, and SEI is looking to accelerate its announced capacity expansion plan ahead of FY3/29 (optical devices 4X and InP substrates 3X vs. FY3/25) and to finalize plans from FY3/30 onward. About 80% of data center op