Tokyo Electron Hits Record High

Tokyo Electron Ltd., a leading chipmaking equipment producer, witnessed a remarkable surge in its market capitalisation, soaring by over $12 billion to achieve a record high on Tuesday. The surge was fuelled by the company’s upwardly revised guidance for the year, driven primarily by robust sales to China.

In Tokyo trading on Tuesday, Tokyo Electron’s shares climbed by 13%, propelling its valuation to ¥15.9 trillion ($106 billion), marking its highest closing level on record. The surge came following the company’s upward adjustment of its operating income forecast for the fiscal year ending in March, raising it by 11% to ¥445 billion. This surpassed analyst expectations and was bolstered by strong sales performance in China, which accounted for 46.9% of its sales in the December quarter.

The surge in demand from Chinese semiconductor ventures, seeking legacy equipment amidst US trade restrictions, has been a key driver behind Tokyo Electron’s impressive sales figures. These ventures are compelled to procure legacy equipment as they face limitations in acquiring cutting-edge chips for tasks such as artificial intelligence development.

Additionally, Tokyo Electron anticipates a rebound in investment from DRAM makers this year, further contributing to its positive outlook. The optimistic prospects of its customers, including Samsung Electronics Co. and SK Hynix Inc., have also bolstered market sentiment, driven by rising demand fuelled by artificial intelligence applications.

Commenting on the market dynamics, Amir Anvarzadeh of Asymmetric Advisors highlighted a “frenzy stage of buying anything tech,” citing Tokyo Electron’s surge alongside other tech firms. However, Anvarzadeh cautioned about the risks associated with heavy reliance on China as a significant market.

Despite potential risks, Tokyo Electron remains optimistic about sustained demand from China in the coming years. Hiroshi Kawamoto, the company’s deputy general manager, expressed confidence in strong demand from China persisting or even strengthening further. He emphasised China’s aggressive investment to reduce its reliance on foreign chip imports and projected continued momentum through 2025.

Tokyo Electron’s record-breaking performance underscores the critical role of China in driving growth in the semiconductor industry and highlights the company’s strategic positioning to capitalise on this burgeoning demand.