Tokyo Electron Ltd reaffirmed its annual outlook and outlined plans to build a ￥104 billion (US$683 million) plant, suggesting it expects sustained spending on artificial intelligence (AI).
The company, one of a handful of key chip gear makers globally, revealed the expansion plans after posting better-than-expected earnings. The Japanese supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co brought in operating profit of ￥199.6 billion in the fourth quarter last year from sales of machines used to prepare, etch and clean silicon wafers that are ultimately cut into memory or logic chips. That was up 51 percent from the previous year and compares with the average of analyst estimates of ￥174 billion.
Closely watched as an indicator of spending on chips used for AI development, Tokyo Electron did not hike its outlook, as compatriot Advantest Corp did a week earlier. Indications from supply chain players have been mixed, as Dutch lithography supplier ASML Holding NV reported a surprisingly high number of orders, while Arm Holdings PLC and Advanced Micro Devices Inc gave cautious forecasts that added to doubts about the sustainability of the free-spending trend in the market.
Photo: Reuters
Tokyo Electron’s move to expand capacity with a plant in Miyagi Prefecture reflects demand from customers such as TSMC, Samsung and SK Hynix Inc, which have indicated they would continue elevated spending on tools used to process wafers into semiconductors.
Much of the investment this year would come from cutting-edge logic makers and high-bandwidth memory makers hurrying to meet AI server demand, Tokyo Electron chief executive officer Toshiki Kawai said on an earnings call.
That is while the company expects a lull in chip gear purchases by Chinese customers, especially among new entrants to chipmaking, Kawai said.
China is expected to comprise a percentage in the mid-30s of Tokyo Electron’s sales in the business year starting in April, down from more than 40 percent in the current fiscal year, he said.
“We can’t deny that we’ve been affected” by US restrictions on exports of chip-related technologies and other geopolitical factors, Kawai said.
Chinese start-up DeepSeek’s low-cost and open-source AI model is raising concern that the tech sector faces far more price competition and less revenue than previously predicted. Still, AI industry leaders have argued that cheaper AI models would mean more new entrants that would further support demand for AI infrastructure over the long term.
Tokyo Electron is still evaluating DeepSeek and its impact, finance division officer Hiroshi Kawamoto said.
If lower-cost AI leads to an expansion of the market, it is a positive, Kawamoto said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) secured a record 70.2 percent share of the global foundry business in the second quarter, up from 67.6 percent the previous quarter, and continued widening its lead over second-placed Samsung Electronics Co, TrendForce Corp (集邦科技) said on Monday. TSMC posted US$30.24 billion in sales in the April-to-June period, up 18.5 percent from the previous quarter, driven by major smartphone customers entering their ramp-up cycle and robust demand for artificial intelligence chips, laptops and PCs, which boosted wafer shipments and average selling prices, TrendForce said in a report. Samsung’s sales also grew in the second quarter, up
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