01-08-2025
Tokyo Electron cuts outlook on canceled logic chip tool orders
Tokyo Electron has slashed its full-year earnings outlook below estimates due to weak investment appetite by some advanced logic manufacturers and a lull in chip gear spending in China.
The Japanese chip equipment supplier, which competes most directly with Applied Materials, said it now sees slower-than-expected recovery in demand from producers of logic chips. It warned that it may not be able to hit a midterm revenue goal of ¥3 trillion ($20 billion) in the next fiscal year and that the timing of reaching that target may "shift slightly.'
"We expected investment to pick up in January-March next year, but that doesn't seem to be likely,' said Hiroshi Kawamoto of Tokyo Electron's finance division. Some customers canceled investment plans altogether.
"A portion of logic makers do not have the ability to invest,' he said.
The Tokyo-based company, whose customers include Samsung Electronics, Taiwan Semiconductor Manufacturing Co. and Intel, now sees operating income of ¥570 billion in the year to March, down from a previous forecast of ¥727 billion. Analysts on average expected ¥719 billion.
Its June quarter operating income slid 12.7% to ¥144.69 billion, a reversal from the double-digit growth logged in prior quarters. Analysts projected a 6% decline on average, according to compiled data. Sales fell 1%, also missing estimates.
Tokyo Electron had benefited from a rush by Chinese chipmakers to stockpile equipment in the face of U.S. export curbs. It had been banking on momentum for servers that power artificial intelligence to make up for a widely expected lull from new makers of legacy chips in China.
But consumer demand for personal computers and smartphones is not recovering at a pace that the company had hoped, it said.
Demand for cutting-edge chips remains strong and sales of its tools will rise over the long term, Kawamoto said. The company expects spending on equipment to manufacture new graphics processing units to pick up in 2026 as next-generation chip architecture progresses. The Japanese company's chip tools are widely used to fabricate cutting-edge GPUs.
