According to data released by the Semiconductor Equipment Association of Japan (SEAJ) on August 27th, Japan’s semiconductor manufacturing equipment sales continue to soar, with July sales up by about 20%, marking four consecutive months of double-digit growth. Sales from January to July reached a historic high for the period.

Reportedly, the sales of Japan-made chip equipment in July 2024 (based on a 3-month average basis, including exports) reached JPY 348.092 billion, a significant 23.6% increase compared to the same month last year.

This marks the seventh consecutive month of growth and the fourth consecutive month with over 10% growth. Monthly sales have surpassed JPY 300 billion for nine straight months.

Compared to the previous month (June 2024), sales increased by 1.2%, marking the eighth monthly growth in nine months.

From January to July 2024, Japan’s chip equipment sales totaled JPY 2.480115 trillion, a 16.7% increase compared to the same period last year. This figure surpasses the previous record of JPY 2.134268 trillion set in 2022, setting a new all-time high.

The upward trend is in accordance with the observation by Japan’s chip equipment giant Tokyo Electron (TEL) and the Semiconductor Equipment and Materials International (SEMI).

Tokyo Electron (TEL) announced in its August 8 financial report that due to strong investments in AI servers, the 2024 global wafer fab equipment (WFE) market size has been revised upward from the previous estimate of around USD 100 billion (up 5% year-on-year) to over USD 100 billion.

The Semiconductor Equipment and Materials International (SEMI) forecast report released on July 10 predicts that global chip equipment sales in 2024 are estimated to increase by 3.4% year-over-year to USD 109 billion, surpassing the USD 107.4 billion record set in 2022.

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(Photo credit: TEL)

With the widespread adoption of AI, the demand for GPUs and high-bandwidth memory (HBM) is soaring. The Semiconductor Equipment Association of Japan (SEAJ) has revised its forecast for sales of Japanese-made semiconductor equipment, predicting that for the first time in history, sales will exceed JPY 4 trillion in the 2024 fiscal year. It is also estimated that sales will further exceed JPY 5 trillion in the 2026 fiscal year.

Per a report by Nikkei on July 5th, SEAJ’s forecast report indicates that for the 2024 fiscal year (April 2024 to March 2025), the sales of Japanese-made chip equipment (including sales by Japanese companies both domestically and overseas) have been revised from the previous estimate of JPY 4.0348 trillion (in January 2024) to JPY 4.2522 trillion, marking a significant increase of 15.0% compared to the 2023 fiscal year.

This will be the first time in history that annual sales exceed JPY 4 trillion, setting a new record. The main reason for this growth is the widespread adoption of AI, which has led to a strong demand for GPUs used in AI servers and a continuous surge in demand for HBM used in conjunction with them.

Reportedly, SEAJ stated that, due to anticipated steady investments in logic/foundry and memory, the sales forecast for Japanese chip equipment in the 2025 fiscal year (April 2025 to March 2026) has been revised upward from JPY 4.4383 trillion to JPY 4.6774 trillion, representing a 10.0% year-on-year increase.

Additionally, the demand for chip equipment is expected to be driven by AI-related semiconductors, resulting in a projected 10.0% year-on-year increase in sales for the 2026 fiscal year, reaching JPY 5.1452 trillion. This will mark the first time annual sales exceed JPY 5 trillion.

The compound annual growth rate (CAGR) for Japanese chip equipment sales during the 2024-2026 period is estimated to be 11.6%. Japan’s global market share for chip equipment (in terms of sales) is approximately 30%, making it the second-largest in the world, following the United States.

SEAJ has indicated that in addition to servers, AI will be integrated into into PCs and smartphones at a faster pace in the near future. SEAJ President Toshiki Kawai mentioned that by 2027, 30-40% of PCs and smartphones are expected to incorporate AI, which is anticipated to have a more significant impact on increasing the demand for chip equipment compared to servers.

Toshiki Kawai further mentioned that as the self-sufficiency in manufacturing equipment remains insufficient in the Chinese market, the demand remains consistent and robust for Japanese-made equipment.

On June 25th, SEAJ released statistics indicating that in May 2024, Japan’s semiconductor equipment sales (3-month moving average, including exports) reached JPY 400.954 billion. This marked a significant increase of 27.0% compared to the same month last year, marking the fifth consecutive month of growth and the largest increase in 19 months (since October 2022, with a growth of 27.6%).

Monthly sales exceeded JPY 300 billion for the seventh consecutive month and surpassed JPY 400 billion for the first time in history, setting a new monthly sales record (previously, the highest record was JPY 389.106 billion in April 2024).

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(Photo credit: TEL)

In the Q3 of 2023 (July-September), global sales of semiconductor manufacturing equipment faced a substantial 11% decline, marking the most significant drop in four years and the second consecutive quarter of contraction. Notably, Taiwan’s market saw a nearly 50% reduction in sales, while the Chinese market achieved a historic step, crossing the 40% threshold of the global sales share for the first time, according to the report by Semiconductor Equipment Association of Japan (SEAJ).

In collaboration with the International Semiconductor Industry Association (SEMI), SEAJ gathered data from over 80 global semiconductor equipment companies. According to the “Semiconductor Manufacturing Equipment(World Wide SEMS Report)” released on December 1st, global chip equipment sales for Q3 2023 dropped by 11% to USD 25.6 billion compared to the same period last year, marking the second consecutive quarter of contraction.

Analyzing regional sales, Taiwan’s market sales dwindled to USD 3.77 billion, a nearly 50% decline from the same period last year (USD 7.28 billion), ranking it as the market with the highest contraction among the top 6. Conversely, the Chinese market experienced a remarkable 42% surge, reaching USD 11.06 billion, constituting 43% of the global sales for the first time and surpassing the 40% mark. This solidifies China’s position as the world’s largest semiconductor equipment market for the second consecutive quarter. Japan witnessed a substantial 29% drop to USD 1.82 billion, North America decreased by 5% to USD 2.5 billion, Europe grew by 2% to USD 1.7 billion, and South Korea faced a significant 19% decrease to USD 3.85 billion.

SEAJ highlighted that compared to the previous quarter (April-June 2023), global chip equipment sales in the last quarter decreased by 1%. In this context, the Chinese market saw a remarkable 46% increase, Taiwan witnessed a steep 34% decrease, South Korea plummeted by 32%, Europe grew by 5%, North America saw a significant 15% decrease, and Japan experienced a substantial 19% increase.

TEL’s Revised Outlook and China’s Rising Impact

Tokyo Electron Limited (TEL), a major player in the Japanese semiconductor equipment industry, released financial data on November 10. Despite delays in investments for advanced process and foundries, the company is experiencing a substantial increase in investments from Chinese customers, especially in mature process. Consequently, TEL has revised its global market size estimate for semiconductor front-end manufacturing equipment (wafer fab equipment, WFE) for the year 2023. The initial estimate made in August, which projected a market size of USD 70-75 billion (a YoY decrease of 25-30%), has been adjusted to USD 85-90 billion (a YoY decrease of 10-15%). Notably, in the last quarter (July-September), the Chinese market’s contribution to TEL’s overall revenue exceeded 40% for the first time.

TEL CEO Toshiki Kawai said, “We have seen around 20 to 30 new customers, and going forward we expect to see the Chinese market grow even further.” Kawai also added, “We have already received inquiries from China for CY2024, so we can expect some visibility. Our forecast for the first half of CY2024 in particular shows that China will continue to represent around 40% of sales by region.”