Tokyo Electronics strives to be the world's number one semiconductor equipment supplier
Tokyo Electronics, Semiconductors, Semiconductor Equipment, Microprocessors
Tokyo Electronics, a large-scale semiconductor manufacturing equipment company in Japan, is leaping to the top in the world, and has set a new target of bringing the combined operating revenue to a maximum of 2 trillion yen within five years. The popularity of the Internet of Things (IoT) and artificial intelligence (AI) has led to an increase in semiconductor demand. In this context, the presence of Japanese companies in the field of manufacturing equipment remains high. However, the future uncertainty of Sino-US friction and the US ban on Huawei is also strengthening.
Semiconductor technology will continue to advance. That is to say, the market will continue to grow in the future. The president of Tokyo Electronics, He Heli Tree, showed confidence in reaching a medium-term business plan at a briefing held recently. The company has set ambitious goals and strives to increase its operating income by 56% compared to FY 2018 (as of March 2019) to 2 trillion yen, while achieving an operating margin and return on equity (ROE) of 30%. the above. If this goal can be achieved, the world's first throne in the field of semiconductor manufacturing equipment that has been hoped to be captured will be included.
Most of the manufacturing equipment produced by Tokyo Electronics is used in "pre-process" (forming fine circuits on semiconductor wafers). The company has built shipping channels for vendors involved in memory and major semiconductors such as MPUs (microprocessors). Among them, some products have a global share of more than 80%.
According to data from US research firm VLSI Research, the first semiconductor manufacturing equipment industry in 2018 was Applied Materials (AMAT), with revenues of approximately $14 billion. Tokyo Electronics ranked third with $10.9 billion, and together with the Dutch ASML and the American Fanlin Group, became one of the top four. Japanese companies account for 5 in the top 10, and their presence in the industry remains high.
On the other hand, the market continues to grow. According to the International Semiconductor Equipment and Materials Association (SEMI), the global semiconductor manufacturing equipment market grew by 72% in the five years from 2014 to 2018. With the advent of new technologies and services such as the Internet of Things and AI, semiconductor demand has grown. At the same time, due to technological innovations such as miniaturization, the unit price of semiconductor manufacturing equipment is also rising. Tokyo Electronics will invest approximately 400 billion yen in research and development expenses in the next three years, seeking to achieve further growth in the industry where technology competition is fierce.
At the same time that East Power competes for the first place, the application materials are further expanding its influence.
Recently, according to foreign media reports, Applied Materials, a semiconductor manufacturing equipment supplier, announced that it has reached a definitive agreement to acquire Japan International Electric Co., Ltd. (Kokusai) held by KKR International Investment Corporation for US$2.2 billion in cash. Electric Corporation, hereinafter referred to as International Electric) All shares outstanding.
International Electric is a semiconductor batch process system and services company, service storage, foundry and logic customers. Applied materials indicate that these process systems are complementary to the application materials in the single-wafer process system product line.
International Electric has great advantages in equipment for thin film deposition, which is a process of adding a thin film on a silicon wafer to form a circuit.
The company was originally part of the telecommunications equipment manufacturer Hitachi Kokusai Electric, which was acquired by KKR in 2017. The following year, the semiconductor equipment division was split into Kokusai Electric.
During the downturn in the semiconductor industry recently, it was difficult for KKR to find buyers of Kokusai Electric. Some companies in Japan have shown interest but have been hampered by potential high purchase prices and review by competition authorities.
However, there are still more negative factors that have surfaced. The semiconductor market is expected to experience negative growth after several years due to the slowdown in China's economic growth. In addition, the US-to-US opposition to the export control of Huawei's technology is increasingly strengthened, which has a great impact on the semiconductor market.
Tokyo Electronics' revenue from China accounts for nearly 20% of the total (about 200 billion yen), and the ratio is not particularly large, but the growth rate is significantly higher than that of Japan, South Korea and North America. In order to achieve the big goal of operating income of 2 trillion yen, in addition to developing new products, access to the growth market is indispensable.