(Bloomberg) — Tokyo Electron Ltd. lowered its forecast for the silicon wafer market, adding to a mixed picture around elevated AI spending.
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Shares in the Japanese supplier to Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. fell as much as 4.6% on Friday following the underwhelming forecast, despite better-than-expected earnings. Tokyo Electron had previously guided for double-digit growth for the broader market in 2025, but on Thursday the company said it expects sales to be in line with 2024. That’s in part due to accelerated deliveries to Chinese customers in 2024, which may lead to a lull in investment from China in the current year, the company said.
One of a handful of key chip gear makers globally, Tokyo Electron is closely watched as an indicator of future spending on chips used for artificial intelligence development. It brought in operating profit of ¥199.6 billion ($1.3 billion) in the December quarter from sales of machines used to prepare, etch and clean silicon wafers that are cut into memory or logic chips. That was up 51% from the previous year and compares with the average of analyst estimates of ¥174 billion. Sales also beat expectations, however Tokyo Electron did not raise its revenue outlook, as compatriot Advantest Corp. had done 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 lavish spending on AI.
Tokyo Electron also outlined plans to build a ¥104 billion plant in Miyagi prefecture, expanding its capacity at a time that customers such as Samsung, TSMC and SK Hynix Inc. have said they plan to keep spending on wafer-processing tools. Much of the investment in 2025 will come from those cutting-edge logic makers and high-bandwidth memory producers hurrying to meet AI server demand, Tokyo Electron Chief Executive Officer Toshiki Kawai said on an earnings call.
That’s while the company expects chip gear purchases by Chinese customers to slow down, especially among new entrants to chipmaking, the CEO said. China is expected to comprise a percentage in the mid-thirties of Tokyo Electron’s sales in the business year starting April, down from more than 40% in the current fiscal year. “We can’t deny that we’ve been affected” by US restrictions on exports of chip-related technologies and other geopolitical factors, Kawai said.
