Tokyo Electron plans to ramp up its R&D spending over five years. This move comes as cutting-edge chip manufacturing tools become increasingly vital for the development of next-generation semiconductors and as competitors strive to close the gap in the industry.
Nikkei reported that Tokyo Electron will significantly increase its R&D spending from fiscal 2024 (April 2024 to March 2025) to fiscal 2028. R&D expenditures will reach JPY1.5 trillion (US$10 billion), up 80% from the past five fiscal years, and the workforce will expand by 10,000 during the period. Furthermore, Capex will reach JPY700 billion, a 90% growth from the past five years.
Tokyo Electron's president and CEO, Toshiki Kawai, emphasized a shared vision for technological advancement with its key customers without naming them. Kawai noted that Tokyo Electron is actively engaged in joint efforts with its major customers, with a strategic focus on developments spanning the next four generations, extending as far as a decade into the future.
According to Bloomberg, Tokyo Electron's top five customers, including Intel, TSMC, Samsung Electronics, SK Hynix, and Micron, account for about 55% of the company's revenue.
Tokyo Electron holds the first or second market share in several chipmaking tool processes, particularly the coater developer for EUV lithography, where Tokyo Electron enjoys a 100% share. Tokyo Electron, which saw market valuation more than double in a year, is among the beneficiaries amid the AI investment hype.
Kawai pointed out that chip computing performance will increase to 2.5 times the current level within five years, driven by advancements in generative AI, autonomous driving, and 6G.
Bloomberg Intelligence analyst Masahiro Wakasugi released a note saying that complex manufacturing processes and high-precision tools will be essential for new GAA transistors, boosting Applied Materials, Tokyo Electron, and ASM International, adding that sales could grow for equipment used in GAA processes by Applied Materials, ASM International, Kokusai Electric, Lam Research, Tokyo Electron, and KLA.
However, emerging competitors, particularly from China, are trying to catch up. Huawei announced a new R&D center in Shanghai in February, and a Nikkei report indicates semiconductor equipment may be one of the company's main focus areas for the R&D center. South China Morning Post reported that Naura Technology Group had begun preliminary research into lithography systems.
Source: Tokyo Electron, April 2024
