Following the disappointing 2025 forecast from Dutch chip making equipment giant ASML, Tokyo Electron also highlighted a potential slowdown in demand from China as well as the risk of stricter U.S. export restrictions.

According to a report from Nikkei, the Japanese semiconductor equipment maker anticipates China’s share of its sales will fall to the 30% range in the second half, down from 41% in the second quarter (ended September 30th), as the investment surge by Chinese chipmakers begins to ease.

Japanese Semiconductor Equipment Providers Warn of Slowing Demand from China

“We are accounting for all possible risks, including the potential for heightened U.S. export controls targeting China,” stated Tokyo Electron’s Senior Vice President Hiroshi Kawamoto, according to Nikkei.

Despite the looming threats, Tokyo Electron has posted strong financial results in the quarter ended September 30^th. The company’s operating income for the July-September quarter surged 54% year-over-year to 148 billion yen, driven by investments in AI and traditional chipmaking in China.

It is worth noting that during the quarter, Tokyo Electron generated 41.3% of its net sales from China, down from 49.9% in the previous quarter, while sales in North America and Japan saw growth, according to its press release.

In addition, other chip equipment makers in Japan seem to agree with Tokyo Electron on the matter. “Demand is slowing even for older-generation technologies, and we are seeing signs that investments are being delayed,” said Fumiyuki Kanai, president of Japanese chipmaking equipment maker Kokusai Electric, according to Nikkei.

Toshio Hiroe, president of Screen Holdings, also noted that with Chinese customers entering the ramp-up phase for their equipment, investment is expected to slow for a while, according to Nikkei.

For Tokyo Electron and Screen Holdings, China reportedly accounted for around 45% of their chipmaking equipment sales during the April-September period.

Citing remarks from SEMI, a previous Nikkei report noted that in 2025, the semiconductor equipment market in China is anticipated to drop below USD 40 billion and back to the level of 2023, after peaking in 2024.

FY2025 Forecast Upgraded Again Thanks to Strong AI Demand

On the other hand, Tokyo Electron has raised its full-year profit forecast again. The company announced earlier that it now anticipates a 44.5% increase in group net profit, reaching 526 billion yen (USD 3.4 billion) for the fiscal year ending March 2025, an upgrade of 48 billion yen from its previous estimate.

In terms of FY2025 sales, Tokyo Electron now projects a 31% rise, reaching 2.4 trillion yen—100 billion yen higher than the prior estimate. The company also announced a larger dividend increase and a stock buyback plan of up to 70 billion yen.

According to the company, it expects a double-digit growth for FY2025, with the demand from DRAM further expanding. NAND investment, on the other hand, would resume as inventory adjustment progress. It also projects the momentum from advanced logic/foundry would offset a lull in investment for mature nodes.

Citing Tokyo Electron President Toshiki Kawai, the Nikkei report notes that despite the ease of investment by Chinese chipmakers, the company sees the investment in AI servers to remain strong, and that there is also solid investment in AI-powered personal computers and smartphones.

Read more

• [News] ASML Reports Disappointing Q3 Bookings while Lowering 2025 Forecast, Raising Concerns in Chip Sector
• [News] China’s Chipmaking Equipment Spending Likely to Drop below USD 40 Billion in 2025 amid U.S. Tensions

(Photo credit: Tokyo Electron)