Unlock the Editor’s Digest totally free
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
Asia’s largest semiconductor gear maker Tokyo Electron says it has largely managed to offset the impression of controls on exports to China by increasing its gross sales of much less superior merchandise to the nation’s chip trade.
The Japanese group has been navigating geopolitical tensions between Washington and Beijing with a two-track technique of specializing in regulation-complying merchandise for China whereas deepening expertise growth with cutting-edge purchasers in different key markets.
“After all, we had some impression [from the Japanese and US export controls], but it surely was a lot smaller than we anticipated,” mentioned Junko Takagi, head of investor relations, in an interview on the sidelines of the Semicon Japan commerce present held within the capital this week.
Takagi added that demand for less-advanced semiconductor gear was “actually large”, with Tokyo Electron producing 43 per cent of its revenues from China within the third quarter, in contrast with 24 per cent a yr earlier.
The Tokyo-based firm is an important participant within the semiconductor provide chain, offering chipmaking gear for trade leaders Taiwan Semiconductor Manufacturing Firm, South Korea’s Samsung Electronics, and Intel within the US.
Since July, some shipments to China have required clearance from export management officers, after Japan expanded restrictions on exports of 23 sorts of superior chipmaking expertise. It was aligning itself with the US and the Netherlands, the place main chip gear makers Utilized Supplies and ASML respectively are additionally beneath strain to not give China entry to the newest semiconductor expertise.
The measures pressured extra Chinese language corporations to give attention to older expertise that was not topic to the restrictions, leading to extra orders for Tokyo Electron.
In the meantime, the corporate has leveraged its tech experience to speed up analysis with cutting-edge purchasers within the US, Taiwan, Europe and Japan. It says it has additionally developed new expertise for etching channels in 3D NAND flash reminiscence, competing with US-based rival Lam Analysis and aiming to extend its market share within the $500mn etching channel market.
Tokyo Electron’s resilience comes as different Japanese corporations are struggling to deal with US-China tensions.
“Japanese trade leaders do consider overwhelmingly that the worldwide provide chain is bifurcating and splitting into two separate provide chains, one for the US and one for China,” mentioned Christopher Thomas, chair of technique advisory agency Built-in Insights, in a geopolitics session at Semicon Japan.
Forty per cent of practically 100 Japanese semiconductor executives mentioned they might focus solely on the US market, and 60 per cent mentioned they might break up their efforts between the US and Chinese language markets if the world does break up into two blocks, in response to Thomas.
“There may be numerous optimism about the way forward for continued technological management of the US, which is Japan’s principal expertise associate within the semiconductor trade,” he added.
However a senior supervisor at a Japanese chip gear maker, who declined to be named, mentioned: “It’s extraordinarily tough to decide on sides. We’re requested to prioritise the connection between Japan and the US slightly than the industrial pursuits . . . China’s market is big, however American expertise is the long run.”