Which company is top by ‘market capitalization’ in Japan?

The Mainichi Shimbun answers some common questions readers may have about market capitalization in Japan.

Question: I keep hearing about a company’s “market capitalization.” What does that mean?

Answer: “Market capitalization” is calculated by multiplying the stock price by the number of outstanding shares. It reflects how the stock market values a company. Another indicator of a company’s worth is “enterprise value.” This is calculated by adding interest-bearing debt, including borrowings, to market capitalization and subtracting cash and deposits that the company can use freely. It shows the company’s substantive value, such as when it is being acquired.

Q: Which company is the top by market capitalization in Japan?

A: On June 12, Kioxia Holdings Corp.’s market capitalization exceeded 44 trillion yen (around $274.59 billion) at the close of trading on the Tokyo Stock Market, making it the top in Japan for the first time. Kioxia is a global company that makes semiconductors and storage devices known as flash memory. Around the world, the spread of artificial intelligence is driving the construction of data centers, and demand for semiconductors for those facilities is surging. Investors responded positively to that.

Q: Didn’t another company recently become the top company by market capitalization?

A: In the Tokyo Stock Market, Toyota Motor Corp. had long held the top position in market capitalization. However, on June 1, it changed for the first time in 22 1/2 years, with SoftBank Group Corp. (SBG) briefly taking the top spot. SBG is well known for its mobile phone business, but it now has taken on a stronger role as an investment company. In recent years, it has focused its investments in AI-related companies, which has driven up its stock price. Recently, stock prices, particularly for AI and semiconductor-related companies, have been highly volatile, which is one of the reasons the top spot in market capitalization has been changing hands over a short period.

Q: So both Kioxia and SBG are companies focused on AI-related businesses?

A: That’s right. The change in the company holding the top market capitalization has prompted some to say that the center of industry is shifting from manufacturing to AI and semiconductors. Let’s hope that leads to Japan’s growth.

(Japanese original by Toru Watanabe, Business News Department)