10 minYour Investment Soundtrack: The Companies Behind BL Equities Japan – Part 3
Continuing our portfolio soundtrack journey, tracks five and six dive into the digital revolution from two complementary angles: global technology leadership and domestic market transformation.
These forces create a powerful dual opportunity—Japanese companies can leverage their technological expertise to capture worldwide digital trends while simultaneously benefiting from their home market's own digital evolution. Your portfolio companies are uniquely positioned to capitalize on both dimensions of this unstoppable digital shift.
Paranoid Android
Digital Transformation, AI, and the Growing Demand for Semiconductors
In 1997, Radiohead released Paranoid Android, a song that captured the alienation and anxiety of life in a rapidly technologizing world. Today, those themes resonate more strongly than ever as digital transformation and AI create exciting new possibilities across industries, driving unprecedented demand for the semiconductors that power this revolution. As businesses and societies embrace this digital renaissance, innovation accelerates and new opportunities emerge—all built upon the foundation of advanced chip technology that enables our increasingly connected world...
Tokyo Electron is where semiconductor manufacturing begins, making the sophisticated equipment that transforms blank silicon wafers into the foundation of computer chips. Their machines handle the most critical front-end processes—applying photoresist coatings, etching precise circuit patterns, and depositing ultra-thin material layers that determine a chip's performance. As technology advances and chips become more complex, manufacturers like TSMC and Samsung must regularly upgrade to Tokyo Electron's latest equipment to stay competitive. The company benefits directly from the relentless pace of technological innovation, where yesterday's cutting-edge equipment becomes obsolete as new chip generations demand even greater precision.
💡 Did you know that Tokyo Electron’s machines can cost tens of millions of euros each – and some are as large as a small bus?
Disco dominates the final steps of chip production with an almost unbreakable market position. Their precision cutting and grinding equipment transforms finished wafers into individual chips, holding 70-80% market share in these specialized processes. What makes them nearly untouchable is customer captivity—once a chip manufacturer installs Disco's equipment, switching becomes prohibitively expensive due to proprietary consumables and specialized expertise. This business-focused company stays laser-focused on its core expertise, delivering exceptional profitability through two key levers: recurring consumable revenues and exposure to fragmented back-end manufacturing where fierce competition among assemblers gives Disco serious pricing power. The bottom line? Disco's sales track global semiconductor production almost perfectly, positioning them to ride the digital transformation wave for years to come.
💡 Did you know that Disco’s machines can grind materials down to just 1/20 the thickness of a sheet of paper and cut them into pieces thinner than 1/35 the diameter of a human hair?
Advantest ensures that every chip actually works before it reaches your devices. In a near-duopoly with US company Teradyne, they test semiconductors at every stage—from early design phases to final system-level validation. Their equipment catches defective chips before they can cause failures in everything from smartphones to electric vehicles. For the heavy hitters like NVIDIA GPUs, Advantest's machines are pretty much the only game in town. As our world becomes increasingly digital and connected, the stakes for chip reliability grow higher, making Advantest's testing solutions more critical than ever for maintaining the quality standards that modern technology demands.
Recruit is the invisible matchmaker connecting people with everything they need—jobs, restaurants, hotels, apartments, beauty salons. Its global crown jewel is job-search giant Indeed, so dominant it’s practically synonymous with online hiring. Alongside Glassdoor, their well-known workplace reviews site, Recruit has built a powerful global platform where job seekers and employers meet. Back home in Japan, Recruit is the go-to for everyday online search and bookings—whether it’s dinner, a hotel, or an apartment. These domestic platforms act as steady cash cows, generating reliable profits while the global job-search business fuels growth abroad. Together, Recruit captures both sides of digitalization: international scale through online hiring and everyday life in Japan moving online.
💡 Did you know that Indeed is the main sponsor of Eintracht Frankfurt - the German football club, our CIO, Guy Wagner roots for?
Plug In Baby
Japan's Digital Transformation: Evolving Culture, Innovation, and the Paperless Shift
When Muse released "Plug In Baby" in 2001, they captured the essence of a world increasingly connected through technology. This resonates powerfully with Japan's journey as the nation—known for both technological prowess and deeply rooted traditional practices like its paper-based business culture—"plugs in" to accelerated digital transformation, revolutionizing its business landscape, operational workflows, and consumer behaviours...
NEC is one of the large IT providers that form the digital backbone of corporate Japan, providing everything from AI-powered face recognition systems to advanced radar equipment for defence. They're the company behind the computer systems that run major companies, the cybersecurity protecting government agencies, and even the surveillance technology keeping cities safe. Their strength lies in handling complex and ongoing projects—the kind of work that creates deep, long-term relationships with clients. While Japan remains their profit centre, they've successfully expanded overseas through strategic acquisitions, proving their advanced technology expertise travels well beyond their home market.
💡 Did you know that NEC owns Avaloq, the Swiss firm powering Banque de Luxembourg’s banking system?
Nomura Research Institute has quietly achieved something remarkable—they've become the invisible infrastructure that powers Japan's entire financial industry. Their back-office systems handle roughly 50% of all transactions on the Tokyo Stock Exchange, and their software has become the de facto standard for asset management and account processing across Japanese financial firms. What makes them nearly untouchable is the lack of viable alternatives: switching would mean rebuilding systems from scratch at enormous cost and risk. Beyond software, they also serve as a prestigious "think tank," providing strategic research that influences major business and government decisions throughout Japan.
Japan Exchange Group runs the Tokyo Stock Exchange—Asia's largest and the world's third-biggest stock market. Every time someone buys Japanese stocks, JPX takes a small cut of the transaction, creating a money-printing machine that gets busier as more people trade. They've built cutting-edge digital trading platforms that process massive volumes at lightning speed, benefiting from the global shift toward electronic trading. Their dominant position creates a virtuous cycle: more traders attract more companies to list their stocks, which attracts even more traders. With renewed global interest in Japanese equities and government reforms improving corporate governance, business is booming.
💡 Did you know that when the Tokyo Stock Exchange opened in 1878, some of its first clients were former samurai, who had been compensated with government bonds after losing their stipends and privileges in the Meiji Restoration?”
Obic has carved out the perfect niche in Japan's software market by focusing on what global giants like SAP and Oracle mostly ignore—mid-sized Japanese companies that severely lag behind in digitalization. While the big players chase large corporations with standardized solutions, Obic builds customized ERP software specifically for smaller Japanese businesses still relying on outdated, inefficient systems. Their direct sales approach creates deep client relationships and industry expertise that's hard to replicate. With Japan's aging workforce creating severe labour shortages, these digitally-behind mid-sized companies have no choice but to modernize their IT systems to boost productivity—making Obic's specialized software increasingly essential for survival.
Nihon M&A Center is Japan’s largest matchmaker for small and mid-sized businesses, helping owners sell their companies. The Japan Times once dubbed it “the Tinder for ageing Japanese CEOs.” As the population ages, countless small business owners face the same problem: no one in the family wants—or is able—to take over, and a shortage of workers makes growth even harder. Nihon M&A Center has digitized what was once a fragmented, relationship-based process, using sophisticated databases and matching algorithms to connect sellers with over 100,000 potential buyers. Its platform scales what used to require countless face-to-face meetings and manual searches, turning Japan’s demographic challenge into its own growth opportunity while reshaping how business succession gets done.
💡 Did you know that in Japan, 1.3 million business owners over 70 have no successor — representing a third of all companies?
GMO Payment Gateway is the invisible plumbing that makes Japan's digital payments flow. Every time you pay online or tap your phone at a store, there's a good chance GMO is processing that transaction behind the scenes. They're riding a massive wave as Japan shifts from its cash-heavy culture toward digital payments—the government wants to jump from 35% cashless to 80% long-term, and e-commerce is still surprisingly underdeveloped compared to other rich countries. GMO captures growth from every swipe, tap, and click as Japan finally goes digital with money.
Sansan has turned Japan's ancient business card ritual into a digital powerhouse. In a country where exchanging business cards is still sacred, Sansan figured out how to digitize and organize all those paper cards with AI that's scary-accurate. But the real magic happens in the cloud—all that contact data becomes a treasure trove of business intelligence that companies can mine for better sales management, networking insights, and relationship mapping. They dominate the market, but most small companies haven't even started tapping into this goldmine yet. Now Sansan is expanding beyond business cards into invoice processing and other paper-heavy workflows, turning Japan's document-obsessed business culture into recurring cloud-based subscription revenue with enormous cross-selling potential.
The Complete Setlist
We’ve seen how Japanese companies are shaping the digital world, connecting people, businesses, and devices in smarter, faster ways. In the last part of this series, we will turn to the evolving habits and values of consumers themselves. From downtrading and value-conscious choices to the rise of the emerging middle class in developing markets, as well as health- and eco-focused lifestyles, these companies are adapting to a world where consumers expect more from the products and services they choose.
Volume 1: Demographic Shift: Healthcare Innovation and Automation – available
Volume 2: Infrastructure Spending and the Energy Transition – available
Volume 3: The Digital Revolution – available
Volume 4: Evolving Consumer Trends - available on 27 November
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Written by Steve Glod, Fund Manager
BLI - Banque de Luxembourg Investments, an asset management company approved by the Luxembourg Financial Sector Supervisory Commission (CSSF)
Final date of writing: 19 November 2025.
Publication date: 20 November 2025
The companies mentioned in this article are all held in the BL Equities Japan Fund managed by the author at the time of writing. As the Fund is actively managed, its composition is subject to change over time; the companies mentioned in this article may leave the portfolio depending on subsequent investment decisions made by the manager.
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