Semiconductors Driving Nikkei Index to 40,000... Tokyo Electron Announces "330 Billion Yen Investment This Year"

Positive Investment Signals in Japan's Semiconductor Equipment Industry
Increased Capital Inflow Expected Due to Stock Price Rise
Tokyo Electron Announces Largest-Scale Investment

Tokyo Electron, a Japanese semiconductor equipment company, has decided to invest a record 320 billion yen (2.8 trillion won) this year. This is due to expectations that demand for related equipment will increase as semiconductor fab (factory) construction gains momentum under Japan's semiconductor reconstruction project.

The intensified investment is becoming even more prominent as Japan's representative stock index, the Nikkei 225 average price (Nikkei Index), recently reached the historic milestone of 40,000 points for the first time. With funds flowing into the stock market, semiconductor equipment companies are also expected to have relatively stronger investment capacity. It is forecasted that investment by semiconductor equipment companies in Japan this year will nearly double compared to five years ago.

According to the semiconductor industry on the 6th, Japanese semiconductor equipment companies such as Screen Holdings, Advantest, Tokyo Electron, and Disco have driven the rise of the Nikkei Index as their stock prices have sharply increased since the end of last year.

Screen Holdings' stock price rose by 68.95% between January 5 and February 5. During the same period, Tokyo Electron (63.56%), Disco (62.36%), and Advantest (54.09%) also recorded high growth rates.

The semiconductor industry evaluates that the rise in Japanese stock prices could lead to a virtuous cycle effect that encourages capital inflow into companies. This means it could significantly help Japanese semiconductor equipment companies gain momentum as they increase various investments to respond to artificial intelligence (AI) demand and strengthen business competitiveness.

The Semiconductor Equipment Association of Japan (SEAJ) forecasted that sales of Japanese-made semiconductor equipment in fiscal year 2024 (April 2024 to March 2025) will increase by 27% from the previous year to 4.0348 trillion yen. The increase in equipment demand is also expected to be positively influenced by overseas companies such as Taiwan's TSMC and the U.S.'s Micron establishing production facilities in Japan.

The total investment, including research and development (R&D) and capital expenditures, of six Japanese semiconductor equipment companies?Tokyo Electron, Disco, Advantest, Lasertec, Tokyo Seimitsu, and Screen Holdings?is expected to reach 547 billion yen (approximately 4.8678 trillion won) as of March this year. The Nihon Keizai Shimbun emphasized that this amount is 1.7 times higher than five years ago.

In particular, Tokyo Electron, which handles the front-end process of semiconductors, announced its results last month during its stock price surge and revealed plans to allocate a record-high R&D budget of 205 billion yen and capital investment of 124 billion yen for fiscal year 2024 (April 2024 to March 2025). It also presented a long-term plan to invest 1.5 trillion yen in R&D and 700 billion yen in capital expenditures from fiscal years 2025 to 2029.

Tokyo Electron plans to strengthen its position as one of the world's top four semiconductor equipment companies in the front-end process field, which produces semiconductor chips by drawing circuits on wafers. It intends to launch new products in areas such as coater-developer (coating and developing) equipment and etching equipment, where it holds a high market share, and plans to open production and development facilities in Iwate and Miyagi prefectures in Japan next year.

The company explained, "We planned investments over the next five years anticipating new product development and market expansion. Since R&D activities need to be conducted not only in Japan but also close to overseas customers, investments will also be made abroad." It added, "We will continue to develop high value-added products and provide the market with innovative equipment that leads the industry."

This content was produced with the assistance of AI translation services.