Tokyo Electron expected to record 20% higher annual sales 

Fab equipment maker Tokyo Electron is expected to record its highest earnings this fiscal year, according to a report by Japanese media Nikkei

Citing estimates from analysts, Nikkei said the company is expected to record 1.6 trillion yen in sales for its fiscal year running from March, 2021 to March, 2022. This will be a 20% increase from the same time period a year ago, which was Tokyo Electron’s highest to date at the time.

The company is also expected to report operating margins between 30% to 40%, Nikkei said. For the previous fiscal year, the operating margin rate was 22%. 

The increase in profitability is thanks to solid sales from field solution services that are done to increase productivity of fab equipment it already supplied to customers.

Tokyo Electron is expected to spend more in research and development in this fiscal year compared to the 135 billion yen it spent a year prior, Nikkei noted. The company is aiming to develop new products faster to lead the market.

The increased performance of the Japanese fab equipment maker is thanks to increased spending in facilities and equipment by semiconductor manufacturers.

Due to the global chip shortage, companies are spending more on their fabs to increase productivity. The US-China trade conflict and major countries announcing incentives for their respective semiconductor industry is also expected to spur growth in the sector.

In March, Intel announced that it would be spending US$20 billion to build two new foundry factories, one in which will be built at Arizona. TSMC also announced that it would spend US$100 billion in the next three years in its facilities. Samsung is also expected to spend more this year than the 33 trillion won it spent last year.

The US government has also recently announced US$10 billion in subsidies for local fabs and up to 40% in tax reduction. Europe, China and South Korea are also planning to offer various incentives.

According to SEMI, global fab equipment spending is expected to reach US$70 billion this year, a 15.5% increase from 2020. This is further expected to increase to over US$80 billion in 2022, according to the organization.