Tokyo Electron suffered from the weak consumer electronics market when semiconductor companies slowed their capital expenditure plans in this transitional period. Meanwhile, China emerged as the growth engine for Asia's largest semiconductor equipment maker.
Tokyo Electron released its financial results for the fiscal first quarter of 2024 (April to June), posting sales of JPY391.7 billion (US$2.7 billion), down 17.29% year-on-year, and a net income of JPY64.3 billion, less than that of JPY88.1 billion from a year ago.
Tokyo Electron restructured its business as its FPD (flat panel display) has become minor, and the SPE (semiconductor production equipment) has grown steadily. Beginning in April 2023, Tokyo Electron disclosed sales of SPE and Field Solutions. According to the latest earnings report, Tokyo Electron's SPE sales declined by 19.51% year-on-year, with Field Solutions seeing an 8.49% fall in sales for the same period.
Tokyo Electron attributed its financial performance to weak demands for final products such as PCs and smartphones and inventory adjustments in memory makers, adding that capital investments for automotive and industrial applications remained strong. Meanwhile, Tokyo Electron said capital investment in the SPE industry entered a temporary adjustment phase; however, the company expects future growth in the market in the medium to long term.
China is the only region where Tokyo Electron saw growth in the last quarter. Bloomberg quoted Toshiki Kawai, Tokyo Electron's CEO, saying there has been extremely strong investment in China, and this demand is expected to continue.
Regarding Japan's export restrictions against China, which were put in force in late July, Hiroshi Kawamoto, the Finance Unit's general manager at Tokyo Electron, stated that their Chinese clients are well aware of the restrictions. He mentioned that these clients have adjusted their strategies accordingly. Moreover, Kawamoto added that the company had not observed any adverse effects on its operations or sales due to these restrictive measures.
As for the outlook, Tokyo Electron expects sales to be JPY790 billion and JPY1,700 billion for the first half and full fiscal year, respectively. Operating income and net income for fiscal 2024 are expected to be JPY393 billion and JPY300 billion, respectively.
Bloomberg Intelligence analyst Masahiro Wakasugi said in a note that Tokyo Electron's sales in the fiscal second quarter could suffer another year-on-year fall as falling demand from memory makers could extend into the next quarter; however, a rebound is possible in the second half of the year thanks to demands for DRAM. On the other hand, equipment demand from logic chip makers might remain weak in the next quarter, and a recovery in the second half could be expected thanks to demand for advanced nodes and strong investments in mature nodes in China.
Tokyo Electron's financial results (JPY billion) | ||||||
Income statement | Jun-22 | Sep-22 | Dec-22 | Mar-23 | Jun-23 | YoY for June-23 |
Sales | 473.7 | 709.2 | 467.8 | 558.3 | 391.7 | -17.29 |
Gross profit | 200.5 | 328.3 | 203.9 | 251.7 | 162.3 | -19.06 |
Operating income | 117.5 | 232.6 | 114.8 | 152.8 | 82.4 | -29.86 |
Net income | 88.1 | 179.3 | 85.6 | 118.7 | 64.3 | -27 |
Source: Tokyo Electron, August 2023
Tokyo Electron's sales by business (JPY billion) | ||||||
Business | Jun-22 | Sep-22 | Dec-22 | Mar-23 | Jun-23 | YoY for June-23 |
SPE New Equipment | 356.7 | 560.9 | 343.7 | 431.2 | 287.1 | -19.51 |
- Logic foundry + Logic & others | 228.3 | 342.1 | 237.2 | 319.1 | 201.0 | -11.97 |
- Non-volatile memory | 71.3 | 134.6 | 55.0 | 64.7 | 40.2 | -43.66 |
- DRAM | 57.1 | 84.1 | 51.6 | 47.4 | 45.9 | -19.51 |
Field Solutions | 109.5 | 131.7 | 117.5 | 115.2 | 100.2 | -8.49 |
Source: Tokyo Electron, August 2023
Tokyo Electron's sales by geography (JPY billion) | ||||||
Geography | Jun-22 | Sep-22 | Dec-22 | Mar-23 | Jun-23 | YoY for June-23 |
China | 102.0 | 181.2 | 107.2 | 137.0 | 153.9 | 50.84 |
Korea | 86.0 | 89.5 | 77.4 | 105.9 | 76.7 | -10.77 |
Taiwan | 97.3 | 135.7 | 112.5 | 87.1 | 64.0 | -34.27 |
North America | 67.3 | 108.3 | 58.5 | 110.2 | 30.1 | -55.27 |
Japan | 42.4 | 91.0 | 48.5 | 58.0 | 29.6 | -30.29 |
Europe | 56.5 | 51.0 | 42.6 | 34.1 | 28.2 | -50.16 |
Rest Of World | 22.1 | 52.5 | 21.2 | 25.9 | 9.3 | -57.87 |
Source: Tokyo Electron, August 2023
China IC-making equipment imports from Japan | ||
Date | Import value (US$m) | YoY (%) |
2023/1 | 388.76 | -34.36 |
2023/2 | 528.78 | 2.16 |
2023/3 | 584.91 | 5.51 |
2023/4 | 600.80 | 37.15 |
2023/5 | 322.81 | -9.34 |
2023/6 | 549.70 | 16.99 |
Source: China Customs, August 2023
