America’s Billionaires Love Japanese Stocks. Why Don’t the Japanese?

TOKYO—Japan’s government is on a mission to make buying stocks hot again.

Many of America’s biggest investors are bullish on Japan. Warren Buffett shared that he increased his investments in Japanese companies during an April visit to the country. Ken Griffin is preparing to reopen an office in Tokyo for his hedge fund, Citadel, and investment banks Goldman Sachs and Morgan Stanley have issued optimistic outlooks for Japan’s stock market.

Japan’s problem is this: There are few signs its estimated 125 million residents share in the excitement.

Burned by dismal returns since the bursting of Japan’s asset bubble in the late 1980s and early 1990s, generations of families here have stashed most of their money in low-yielding savings accounts rather than trying to increase their wealth through the stock market.

Japanese households put an average of just 11% of their savings into stocks and 54% in cash and bank deposits, according to Bank of Japan data released last month. That trails well behind the U.S., where households have about 39% of their money tied up in the market and only 13% in cash and bank deposits, according to Federal Reserve data.

Haruyo Arai, a 62-year-old office worker, began investing in the stock market just last month.

“I was brought up by parents who would say, ‘Don’t dabble in stocks,’ ” she said.

Japanese Prime Minister Fumio Kishida has pledged to double households’ asset incomes, in part by encouraging people to invest in risky assets like stocks. The government is raising caps for Japan’s tax-exempt investment system for small investors, the Nippon Individual Savings Account, with changes set to take effect in January. The Tokyo Stock Exchange has been urging companies to boost their valuations and increase shareholder returns.

Arai cited the upcoming expansion to NISA, along with a desire to save more money for the future, as some of the reasons she decided to begin taking investing more seriously. She has been taking weekend classes at Tokyo-based Financial Academy to learn more about stocks and waking up early every morning to watch a TV news program focused on the economy.

Some believe investors like Arai will prove to be the exception, not the rule. Stocks here haven’t hit a record in decades. There isn’t much buzz among ordinary people about investing in Japanese markets.

“I’ve got the impression that Japanese people don’t really think positively about the desire to make money,” said Takashi Kawaguchi, a 48-year-old office worker who, like Arai, has been learning about investing at Financial Academy.

While the 2023 rally has helped lift Japanese stock indexes to 33-year highs, long-term returns pale in comparison to what an investor would have gotten by investing in U.S. stocks. The Nikkei closed at 32,402 on Friday, still 17% below its record hit in 1989. The S&P 500 has grown more than twelvefold over that time. That has made many investors here turn to foreign markets instead of focusing their bets within Japan.

“The Nikkei might hit 40,000, god knows when,” said Heihachiro “Hutch” Okamoto, foreign equity consultant at retail brokerage Monex. “But most of our investors prefer U.S. stocks.”

To Okamoto’s point, the most popular names traded on Monex daily aren’t Japanese stock indexes like the Topix or Nikkei, brand-name companies like Sony or even the “sogo shosha”—the trading houses that Buffett has invested in. Instead, they are all American names: companies like Nvidia, Tesla, Apple and Amazon.com, as well as funds tracking the S&P 500 and the Nasdaq-100.

And that is just among those interested in investing in the first place. While in past years, everyday investors in Japan made a name for themselves with their forays into the foreign exchange market, the overall trading culture here has been one of hesitation.

“Most people here think investing is very risky,” said Hidekazu Ishida, a special adviser at FinCity.Tokyo, which works with the government and the financial industry to try to boost investment in Tokyo. Being into finance comes off as “kakkowarui,” he added, referencing a word for uncool.

Even some heads of companies are lukewarm about the idea of encouraging more individual investors to buy Japanese stocks.

“I’m neutral about that,” said Takeshi Niinami, chief executive officer of whisky and beverage giant Suntory, when asked if he thought it would be a good idea for more Japanese people to invest in the market. Stock investing is risky, he said. And many Japanese people remain wary of participating in the market, because of the severity of prior downturns.

“I think perhaps increasing interest rates is better for people,” he said.

—Chieko Tsuneoka and Alastair Gale contributed to this article

Apple has dominated the electronics supply chain for years. No more.

Artificial-intelligence companies are writing huge checks for chips, memory, specialised glass fibre and more, and they have begun to out-duel Apple in the race to secure components.

Suppliers accustomed to catering to Apple’s every whim are gaining the leverage to demand that the iPhone maker pay more.

Apple’s normally generous profit margins will face pressure this year, analysts say, and consumers could eventually feel the hit.

Chief Executive Tim Cook mentioned the problem in a Thursday earnings call, saying Apple was seeing constraints in its chip supplies and that memory prices were increasing significantly.

Those comments appeared to weigh on Apple shares, which traded flat despite blowout iPhone sales and record company profit.

“Apple is getting squeezed for sure,” said Sravan Kundojjala, who analyses the industry for research firm SemiAnalysis.

AI chip leader Nvidia recently became the largest customer of Taiwan Semiconductor Manufacturing , or TSMC, Nvidia Chief Executive Jensen Huang said on a podcast.

Apple had been TSMC’s biggest customer by a wide margin for years. TSMC is the world’s leading manufacturer of advanced chips for AI servers, smartphones and other computing devices.

Spokesmen for Apple and TSMC declined to comment.

The big computers that handle AI tasks don’t look like the smartphones consumers own, but many companies supply components for both. In particular, memory chips are in short supply as companies such as OpenAI, Alphabet’s Google, Meta , Microsoft and others collectively spend hundreds of billions of dollars to build AI computing capacity.

“The rate of increase in the price of memory is unprecedented,” said Mike Howard , an analyst for research firm TechInsights.

That applies both to the flash memory chips that store photos and videos, called NAND, as well as the memory used to run apps quickly, called DRAM.

By the end of this year, the price of DRAM will quadruple from 2023 levels, and NAND will more than triple, estimates TechInsights.

Howard estimates that Apple could pay $57 more for the two types of memory that go into the base-model iPhone 18 due this fall compared with the base model iPhone 17 currently on sale. For a device that retails for $799, that would be a big hit to profit margins.

Apple’s purchasing power and expertise in designing advanced electronics long made it an unrivaled Goliath among the Asian companies that make most of the iPhone’s parts and assemble the device.

Apple spends billions of dollars a year on NAND, for instance, according to people familiar with the figures, likely making it the single biggest buyer globally. Suppliers flocked to win Apple’s business, hoping to leverage its know-how and prestige to attract other customers.

These days, however, “the companies now pushing the boundaries of human‑scale engineering are the ones like Nvidia,” said Ming-chi Kuo, an analyst with TF International Securities.

Demand for AI hardware is poised to keep growing rapidly. Apple’s spending growth is modest in comparison with what is being spent to fill up AI data centers, even though it is breaking records with huge sales of the iPhone 17.

Samsung Electronics and SK Hynix are raising the price of a type of DRAM chip for Apple, according to people familiar with Apple’s supply chain.

Big AI companies pay generously and are willing to lock in supply and make upfront payments, giving the South Korean chip makers leverage against the iPhone maker.

Apple signs long-term contracts for memory, but it has used its heft to squeeze suppliers.

Its contracts have empowered it to negotiate prices as often as weekly, and to even refuse to buy any memory from a supplier if Apple didn’t view the price as favorable, according to people familiar with its memory purchases.

To boost leverage with suppliers, Apple even began stocking more inventory of memory. That was atypical for Cook, who normally cuts inventory to the bone to maximize Apple’s cash flow.

Apple is fighting not only for current deliveries but also for the attention of engineers at suppliers.

Glass scientists who worked on developing the smoothest and lightest smartphone displays are now also spending time on specialised glass for packaging advanced AI processing chips, according to industry executives.

Makers of sensors and other gizmos inside the iPhone are winning new business from AI companies such as OpenAI that are developing their own hardware.

Still, suppliers said they were far from giving up on business with Apple. Working with Apple is a form of education, they said, because it remains one of the most demanding and disciplined customers in the industry.

TSMC, the Taiwanese chip manufacturer, has built successive generations of its most advanced chips with Apple as its lead customer, relying on the big predictable demand for iPhones.

Now that TSMC is doing more business with Nvidia and other AI companies, people with knowledge of the chip supply chain said Apple was exploring whether some lower-end processors could be made by someone other than TSMC.

One of Apple’s biggest profit-spinners is selling extra memory for far more than the memory chips cost the company.

Last fall Apple discontinued the iPhone Pro model with 128 gigabytes of storage.

Customers who want that model must now start at 256 gigabytes and pay $100 more—the type of move that could be repeated this year to help Apple offset higher costs, wrote Craig Moffett, an analyst at Moffett Nathanson, in an investor note.

However, Apple isn’t expected to raise the price of its next iPhone models over similarly equipped iPhone 17s, said Kuo, the analyst.

News Corp, owner of The Wall Street Journal, has a commercial agreement to supply news through Apple services.

America’s Billionaires Love Japanese Stocks. Why Don’t the Japanese?

Japan’s government wants cash-hoarding households to invest more

Parts for iPhones to cost more owing to surging demand from AI companies.