TOELY

Tokyo Electron is the largest semiconductor equipment maker in Japan and the third largest globally behind Applied Materials and ASML. Founded in 1963, the company supplies the tools that perform the most critical wafer fabrication steps: coating photoresist onto wafers and developing exposed patterns (coater/developer), removing material with plasma (dry etch), and depositing thin atomic layers of metal and dielectric (CVD and ALD). These are not peripheral tools. They sit at the center of every fab's process flow, and a modern leading-edge wafer passes through TEL equipment dozens of times before it is finished.

The coater/developer franchise is the crown jewel. TEL's CLEAN TRACK lithography track systems hold roughly 92% of the global market. Every EUV lithography step — the most expensive and technically demanding process in chipmaking — requires a coater/developer to apply photoresist before exposure and develop the pattern afterward. ASML makes the scanner; TEL makes the tool that feeds it and catches the output. This near-monopoly position in the EUV track segment means TEL is present in every leading-edge logic and DRAM fab that TSMC, Samsung, Intel, and SK Hynix operate. In etch, CVD, and ALD, TEL competes head-to-head with Applied Materials and Lam Research, holding roughly 37-38% share in each — not dominant, but large enough to win Process of Record positions on critical layers at major customers.

FY2025 (April 2024 through March 2025) was a record year. Revenue reached JPY 2.43 trillion (~$15.7B), up 32.8%, driven by surging DRAM investment — particularly HBM for AI — and sustained leading-edge logic spending at TSMC and Samsung. Operating profit hit JPY 697B with a 28.7% operating margin. China accounted for roughly 34-38% of revenue, though this share declined from the prior year peak of ~47% as TEL rebalanced toward Taiwan (~20%), Korea (~18%), and a growing North America segment (~15%) supported by CHIPS Act-funded fabs.

FY2026 has been a transition year. Q1 (Apr-Jun 2025) and Q3 (Oct-Dec 2025) saw sequential revenue declines as the industry digested a record equipment shipment cycle. But management raised full-year guidance to JPY 2,380-2,410B with the second half guided to a record JPY 1,100B+ in sales. TEL projects the WFE (wafer fab equipment) market will grow 15-20%+ in calendar year 2026, driven by AI server chip demand, leading-edge logic node transitions, and sharp increases in both HBM and commodity DRAM investment. Equipment for advanced AI-related chips is expected to reach ~40% of TEL's total sales by FY2026.