U. S. export controls are affecting global chip-tool manufacturers, with Tokyo Electron (TEL) working urgently to offset declining orders from China. In a recent interview with Nikkei, Hiroshi Kawamoto, Executive Managing Director of Finance, stated that by fiscal 2026, the company’s advanced chip equipment will make up nearly 40% of total sales—sufficient to counterbalance the reduction in the Chinese market. The report, referencing Kawamoto, explains that to compensate for lost business in China, TEL is boosting sales of high value-added products for AI. TEL anticipates that equipment used to manufacture advanced chips for AI servers, as well as AI-capable PCs and smartphones, will account for over 30% of total sales by fiscal 2025. A key growth segment highlighted in the report is etching equipment used in the DRAM wiring process. Kawamoto notes that HBM for AI applications is fueling robust demand for etching tools. He further mentions that sales of etching equipment are expected to reach several tens of billions of yen in fiscal 2024, with cumulative sales projected to exceed 500 billion yen by fiscal 2030. TEL’s sales share in China stands at 42% in fiscal 2024 and is projected to decline to around 35% in fiscal 2025.

Kawamoto adds that whether it will drop below 30% by fiscal 2026 remains uncertain, as indicated in the report. Rising AI Memory Demand Boosts TEL’s Growth Outlook Beyond the weakening Chinese sales, the report highlights a sharp increase in memory demand driven by AI and its potential effects on TEL’s future prospects. Kawamoto states that strong investment in data centers supports solid memory demand, and memory manufacturers are increasing utilization of equipment, thereby accelerating demand for upgrades to TEL’s existing tools. However, Kawamoto also points out, as noted in the report, that significant new investments in DRAM equipment are unlikely before the latter half of 2026. NAND producers are expected to invest even later, since shifts in NAND market dynamics typically take longer to impact equipment demand. Impact of the TSMC Leak Case on TEL Regarding the recent incident involving TSMC engineers allegedly leaking key 2nm technology—leading to the indictment of TEL’s Taiwan subsidiary by prosecutors on December 2—the report states that Kawamoto affirms the company is taking measures to prevent similar events. He adds that so far, the case has not materially affected TEL’s relationship with TSMC. Importantly, as TechNews reports, the indictment does not claim that Tokyo Electron or its Taiwan subsidiary played an organizational role in instigating or endorsing the trade-secret theft. Consequently, industry analysts expect no major financial repercussions for the company. Nevertheless, the report notes that if TEL’s Taiwan subsidiary is ultimately found guilty, it could face fines up to NT$120 million (approximately US$3. 8 million). Read more [News] TSMC’s 2nm Data Leak Exposes Fragile Triangle: TEL, Rapidus, and Taiwan-Japan Semiconductor Clash [News] Tokyo Electron Develops Major Kumamoto R&D Hub Near TSMC to Advance 1nm Chip Equipment (Photo credit: Tokyo Electron)