[News] Tokyo Electron Sees AI-Driven Sales Hitting 40% by FY2026, Offsetting China Slowdown

U.S. export controls are hitting global chip-tool makers, and Tokyo Electron (TEL) is scrambling to make up for shrinking orders from China. According to a recent interview with Nikkei, Executive Managing Director for finance Hiroshi Kawamoto says that by fiscal 2026, the company’s equipment for advanced chips will rise to nearly 40% of total sales—enough to offset the decline in the Chinese market.

The report, citing Kawamoto, notes that to compensate for the loss of the Chinese market, TEL is expanding sales of high value–added products for AI. TEL forecasts that equipment used to produce advanced chips for AI servers, as well as AI-enabled PCs and smartphones, will account for more than 30% of total sales in fiscal 2025.

One of the key growth areas, according to the report, is etching equipment used in the DRAM wiring process. Kawamoto says that HBM for AI applications is driving strong demand for etching tools. He adds that sales of etching equipment total several tens of billions of yen in fiscal 2024, and cumulative sales are expected to exceed 500 billion yen by fiscal 2030.

Meanwhile, TEL’s China sales share stands at 42% in fiscal 2024 and is expected to decline to about 35% in fiscal 2025. Whether it will fall below 30% in fiscal 2026 remains unclear, he adds, as the report notes.

Rising AI Memory Demand Strengthens TEL’s Growth Prospects

Aside from weakening sales in China, the report also highlights a sharp rise in memory demand driven by AI and its potential impact on TEL’s outlook. The report notes that Kawamoto says strong data-center investment is supporting robust memory demand, and that memory makers are increasing equipment utilization, lifting demand for upgrades to tools already sold by TEL.

However, as the report highlights, citing Kawamoto, large-scale investments in new DRAM equipment are unlikely to begin until the second half of 2026. NAND manufacturers will invest even later, he adds, because changes in NAND market conditions take longer to translate into equipment demand.

Impact of TSMC Leak Case on TEL

As for the recent case in which TSMC engineers allegedly leaked key 2nm technology—leading prosecutors on December 2 to indict TEL’s Taiwan subsidiary—the report notes that Kawamoto says the company is working to prevent similar incidents. He adds that the case has not, so far, had a significant impact on its relationship with TSMC.

Notably, as TechNews indicates, the indictment does not allege that Tokyo Electron or its Taiwan subsidiary had any organizational role in directing or encouraging the trade-secret theft. As a result, industry experts expect the company will not face major material financial impact. However, according to the report, if Tokyo Electron’s Taiwan subsidiary is ultimately found guilty, it could face a fine of up to NT$120 million (about 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 Builds Major Kumamoto R&D Hub Near TSMC to Advance 1nm Chip Equipment

(Photo credit: Tokyo Electron)