Tokyo Electron Ltd yesterday raised its profit outlook for the year after Chinese chipmakers moved up deliveries ahead of a possible crackdown on exports of Japanese production equipment.
The Tokyo-based supplier to Taiwan Semiconductor Manufacturing Co (台積電) and Intel Corp lifted its forecast for the year to next month above expectations to ￥580 billion (US$4.4 billion).
Some companies in China are accelerating deliveries and investment plans, fearful of not being able to secure equipment as international trade walls rise, Tokyo Electron executives said on an earnings call.
Photo: Reuters
The company, which competes against Applied Materials Inc, had slashed forecasts in November last year in the wake of US sanctions on advanced chip-related exports.
There was a dip in the fourth quarter last year as US chip gear makers were unable to ship to Chinese customers and production was challenged, but the feared cratering in demand did not materialize, Tokyo Electron general manager of finance Hiroshi Kawamoto said.
“The equipment industry has entered a new stage for further growth,” Kawamoto said. “We expect a recovery from the second half of 2023 and continued growth from 2024, thanks to rising demand from areas like virtual reality, as well as government support for investments.”
The company is closely watched for its reaction to the news that Japan and the Netherlands have agreed to join the US in imposing export controls on advanced semiconductor technology and products to China.
Tokyo Electron is one of a handful of suppliers to the global chipmaking industry, providing machinery to fabricate the latest generation of chips.
Tokyo Electron, which also announced a three for one stock split, reported ￥114.8 billion operating profit for last quarter, above average analyst estimates of ￥102 billion.
Demand for semiconductor production equipment was stronger than expected thanks to orders from foundry makers, the company said.
It now expects net sales of semiconductor production equipment of ￥2.12 trillion for the full year, up from a previous forecast of ￥2.05 trillion.
“China will remain an important market for Tokyo Electron,” Kawamoto said, adding that the company has no plans to shrink operations in a country it sees as a large market for automotive power chips. “We do not just deal in cutting-edge equipment.”
Tokyo Electron and fellow Japanese semiconductor industry players Renesas Electronics Corp, Nikon Corp and Sumco Corp each have a significant proportion of their sales going directly to China, with even more of their business dependent on the market via sales by their customers.
Dutch equipment maker ASML Holding NV said at the end of last month that the sanctions would not have a material impact on its earnings this year, despite China perennially being one of the biggest importers of chips and chip technology.
Silicon wafer maker Sumco, which also reported earnings yesterday, said that demand from automotive and industrial-use customers remains strong, but the weak smartphone market is likely to yield lower wafer orders this year before recovering next year.
The inventory adjustments that have hit the memorychip-making industry hard in the past few months are likely to continue for the time being, Sumco chief executive officer Mayuki Hashimoto said.
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