[News] Chip Equipment Makers Ride AI Boom but Face 5% Q2 Revenue Decline on China Slowdown

According to Nikkei, earnings among leading chipmaking equipment makers are beginning to diverge, shaped by weakening sales in China and rising demand for AI chips.

The report highlights that the combined net profit of the top ten chipmaking equipment makers remained robust, rising about 40% to $9.4 billion—marking a fifth straight quarter of growth fueled by AI demand. Still, half of them recorded either year-on-year declines in second-quarter profit or slower growth than a year earlier.

Notably, the report adds that in the second quarter, nine companies disclosing China sales posted a combined 5% drop to $9.3 billion, equal to 30% of total sales—down from around 40% in late 2023 to early 2024.

AI Demand Fuels Profit Growth for Key Players

For companies benefiting from AI chip demand, the report notes that Lam Research’s net profit surged 69% on strong sales of deposition and etching tools for HBM and advanced logic chips. KLA also posted a 44% profit increase, driven by growth in inspection and measurement equipment for advanced packaging.

KLA said that for FY2025, it maintains its original projection of mid-single-digit growth in the wafer fab equipment (WFE) market. However, the company also warned that overall demand from China is expected to decline this year, as noted by ijiwei.

China Slowdown Weighs on Global Equipment Makers

Sales to China are projected to fall for major semiconductor equipment makers, including Applied Materials and Tokyo Electron, as indicated by ZDNet.

According to ZDNet, Applied Materials posted fiscal third-quarter sales of $7.32 billion, up 8% from a year earlier. However, its fourth-quarter outlook came in well below Wall Street expectations, with the company pointing to weaker sales in China as the main factor. Its CEO says that the company expects revenue from China to fall about 15–20% year-on-year, as cited by the report.

Slowing demand in China has also hit Japanese giant Tokyo Electron, Nikkei notes. The company generated 39% of its sales in China, down 11 percentage points from a year earlier, with growth in Taiwan unable to offset the decline.

As noted by Nikkei, Hiroshi Kawamoto, senior vice president of Tokyo Electron’s Finance Division, said investments by emerging Chinese chipmakers in mature process products contracted more than expected.

Screen President Masato Goto also commented on the Chinese market, noting that local equipment suppliers have been gaining momentum, particularly in memory and power semiconductors, as Nikkei highlights.

Read more

• [News] Chipmaking Tool Giants TEL, KLA Flag Weak China Demand in 2025 Amid Trade Tensions
• [News] Applied Materials Warns of Q4 Revenue Drop on China Slowdown, Tariff Worries

(Photo credit: Applied Materials)