Chinese chipmakers are speeding up investments in mature semiconductor equipment as the US and its allies tighten export controls on cutting-edge tech, Tokyo Electron said on Thursday.
Asia’s biggest semiconductor gear maker is seeing “extremely strong investment” in China and is winning new customers there, Tokyo Electron chief executive officer Toshiki Kawai said on an earnings call.
“This is not just a passing trend for this year,” Kawai said. “We expect this demand to continue.”
That surge is helping to make up for investment delays by high-end logic chipmakers and foundries, the company said.
China made up 39 percent of the company’s revenues in the second quarter.
Tokyo Electron is an important link in the chipmaking supply chain, providing the machinery that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Samsung Electronics Co and Intel Corp rely on for their advanced silicon products.
The Japanese company said that it expects strong momentum in investments around automotive and industrial applications, a trend that is continuing from the prior fiscal year.
Tokyo Electron stuck to its full-year revenue outlook of ￥1.7 trillion (US$11.8 billion), despite sales dropping 17 percent last quarter in a global electronics slump. It earned an operating profit of ￥82.4 billion, just above estimates.
“Our Chinese clients are well aware of the restrictions and have reworked their strategies,” said Hiroshi Kawamoto, director of Tokyo Electron’s finance unit.
The company said it has seen no impact on operations or sales from Japan’s new curbs on shipments of chipmaking equipment, effective last month, Kawamoto said.
The boost from China is helping Tokyo Electron as spending slows down elsewhere amid a market slump that is stoking uncertainty in the global chip arena.
TSMC last month cut its annual sales outlook and postponed the start of production at its signature Arizona project to 2025.
A surge in demand for artificial intelligence (AI)-training chips — which made Nvidia Corp the world’s first trillion-dollar chipmaker — is not translating to an immediate boost for chip gear makers.
“We are receiving many inquiries in artificial intelligence-related investment,” Kawamoto said, adding that the company believes the overall chip market bottomed out last quarter.
“The amount may at first be small,” but AI should start contributing to earnings next fiscal year, he said.
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