Tokyo Electron Ltd. raised its earnings outlook for the year, suggesting the key supplier to global chipmakers anticipates stronger demand than feared.
(Bloomberg) — Tokyo Electron Ltd. raised its earnings outlook for the year, suggesting the key supplier to global chipmakers anticipates stronger demand than feared.
The company, which supplies Taiwan Semiconductor Manufacturing Co. and Intel Corp. also announced a 3-for-1 stock split.
The Japanese firm lifted its full-year operating profit outlook by 6% to ¥580 billion ($4.4 billion), due to some customers moving up deliveries, as uncertainty grows over an economic slowdown and rising international trade walls. The company had slashed forecasts in November in the wake of US sanctions on China trade.
It reported ¥114.8 billion operating profit for the December quarter, above average analyst estimates of ¥102 billion. Net sales of semiconductor production equipment came to ¥458.8 billion, beating an estimate of ¥434.8 billion.
The Tokyo-based supplier to the likes of Taiwan Semiconductor Manufacturing Co. and Intel Corp. is closely watched for its reaction to the recent news that Japan and the Netherlands have agreed to join the US in imposing strict export controls on advanced semiconductor technology and products to China. Tokyo Electron is one of a handful of indispensable suppliers to the global chipmaking industry, providing machinery to fabricate the latest generation of chips.
Washington has stepped up its campaign to curb China’s access to technology that may aid or improve its military capabilities, issuing in October sweeping restrictions on US-connected exports or staff heading to the Asian nation. To make those sanctions work, the Biden administration has sought and secured the collaboration of international partners.
Dutch equipment maker ASML Holding NV said at the end of January that the sanctions won’t have a material impact on its 2023 earnings, despite China perennially being one of the biggest importers of chips and chip technology.
Tokyo Electron and fellow Japanese semiconductor industry players Renesas Electronics Corp., Nikon Corp. and Sumco Corp. each have a significant proportion of their sales going directly to China, with more of their business dependent on the market via sales by their customers. All four report earnings on Thursday and will face questions about their outlook under the new trade regime.
Two Japanese chip suppliers that already reported their December-quarter results, Advantest Corp. and Screen Holdings Co., gave solid numbers that were in line with market expectations. Yokohama-based Lasertec Corp. saw its shares drop after trimming its order outlook, though it too gave a positive signal for a recovery, saying “demand for advanced equipment is not waning” and that orders postponed should come back in or beyond the next fiscal year.
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