Tokyo Electron Ups Forecast After AI Demand Helps Sales Beat
(Bloomberg) -- Tokyo Electron Ltd. raised its profit forecast for the fiscal year to March after reporting a better-than-expected surge in sales.
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The Japanese provider of semiconductor-patterning systems said it sees operating profit for the full year reaching ￥627 billion ($4.3 billion), up 8% from its previous guidance. Citing “strong growth trends from the previous fiscal year, primarily due to investments in mature generation of semiconductors in China,” the company on Thursday also raised its outlook for sales and profit for the period from April to September.
Revenue in the quarter to June was ￥555 billion, beating the analyst consensus of ￥500 billion and snapping a streak of year-on-year declines dating back to 2022. Operating profit for those three months was ￥165.7 billion, also above expectations.
Tokyo Electron has had a turbulent year, as artificial intelligence demand initially lifted its prospects along with the wider chipmaking industry, but a US push to curb tech exports to China has provided headwinds. As of March, more than 47% of Tokyo Electron’s revenue came from China, in part because the Asian nation has been stockpiling equipment ahead of potential elevated sanctions by Washington. The company in recent weeks gave up all gains made this year, shedding $44 billion in market capitalization since its all-time high in April.
Tokyo Electron sees no sign of stricter US curbs on chip tools incoming, finance division officer Hiroshi Kawamoto said on a call after its earnings report. The company continues to monitor the situation closely, he added.
The chip gear maker has historically relied heavily on Intel Corp., the US chip pioneer that’s recently struggled to keep up with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. in the race to fabricate the most advanced chips. While those two companies are also Tokyo Electron customers, the decline in orders from Intel has played a role in making Tokyo Electron more reliant on China.
Alongside Dutch supplier ASML Holding NV, Tokyo Electron plays a critical role in the chipmaking supply chain, providing the equipment and expertise to manufacture cutting-edge processors and memory chips. The Biden administration has asked the Netherlands and Japan to tighten restrictions on advanced tech outflows to China, in line with curbs on US firms.
(Updates with further details from company’s report)
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