SMC: Stock Story

As with any investment, your capital is at risk.

Tell us about the company…

Sarah Clark: Inside a high-tech factory, machines hum with coordination. Robotic arms glide. Every movement is perfectly timed.

Behind it all — powering that motion — are components driven by air.

This the space SMC quietly dominates. Founded in 1959, this Japanese company is now a global leader in industrial pneumatics.

Its parts may be hidden, but they’re vital to keeping production lines running — from semiconductors to life-saving medical devices.

And as automation accelerates, SMC’s precision is more essential than ever.

What makes this stock special?

At Baillie Gifford, we’ve invested in SMC for over 30 years. And it’s that long-term perspective that helps us see what sets it apart.

SMC’s engineers are hands-on — guiding clients from concept to installation.

They design, customise, and deliver. Anywhere in the world. This deep partnership turns small components into high-impact solutions.

It also has an impressive competitive edge in logistics. It doesn’t just make parts — it delivers them, fast and reliably.

Its supply chain runs like a shinkansen — built for speed, dependability, and minimal delay.

Heavy investment in local warehouses and supply chains means customers get what they need, when they need it.

The Takada family still stand at the helm and are still deeply invested.

Like many enduring Japanese businesses, this family stewardship encourages long-term decision-making — and helps the company stay focused on future growth.

But underpinning it all is something distinctly Japanese, a deep-rooted culture of craftmanship and meticulous engineering. 

What could the future hold?

SMC isn’t standing still.

The company is expanding beyond its traditional base — reaching into sectors like food, healthcare, and packaging, where demand is more stable and less cyclical.

At the same time, SMC is doubling down on environmental and energy performance. Most factories run on 7–8 bar of compressed air — but SMC’s next-generation pneumatics can operate at just 4 bar. This is a game-changer for manufacturers: delivering huge, annualised energy savings.

That kind of impact elevates SMC from a component supplier to a strategic partner — opening the door to new customers.

Management’s goal is to reach 50% global market share — and there’s reason to believe it can. With its relentless focus on precision, global trust, and long-term mindset, SMC could continue to shape the future of manufacturing.

Risk factors

This communication was produced and approved in November 2025 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.

The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.

All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.

The images used in this communication are for illustrative purposes only.

Financial Intermediaries

This communication is suitable for use of financial intermediaries. Financial intermediaries are solely responsible for any further distribution and Baillie Gifford takes no responsibility for the reliance on this document by any other person who did not receive this document directly from Baillie Gifford.