Canon cameras will cost more due to AI paper: the manufacturer is experiencing a memory shortage, expenses have risen

Short news summary

The electronics manufacturer Canon is forced either to cut production due to memory shortages or pay inflated prices for it. Over the year the company spent an additional $313 million, and operating profit fell faster than expected.

1. What happened with the shares
- Canon’s shares on the Tokyo Stock Exchange dropped to their lowest level in over 12 months – 8%.

- The decline is linked to management’s statement about the impact of the memory crisis on the company’s business.

2. How the company responds to the memory shortage
- It chose to purchase chips at high prices rather than cut production.

- This led to additional costs of $313 million.

- Canon announced a need to raise prices for its products; the increase only partially covers the rise in memory costs.

3. Financial metrics
Metric Value Commentary Annual operating profit forecast –5% to $2.85 billion Reduced due to rising memory costs Operating profit Q1 –26% to $447 million Rapid decline versus expectations Revenue Growth Despite lower profits, revenue increased
- Profit decline was seen across all segments: printers, medical equipment, cameras and industrial equipment.

- The cost increase is mainly driven by the purchase of memory chips.

4. Outlook
- Despite strong demand for lithography systems (which Canon also supplies), rising memory prices limit the company’s ability to grow profits.

- It remains unclear how much the Middle East crisis will affect the business.

Conclusion: Canon faces a double problem: memory shortages force it to pay high prices, leading to falling operating profit and share price decline. The company plans to partially offset higher memory costs by raising its product prices, but the overall financial situation remains strained.