Tokyo Electron Delivers Record FY2025 Results Amid AI Boom, Eyes Growth Through CVD Innovation and Geopolitical Resilience

Tokyo Electron (TEL) achieved a record-breaking financial year in FY2025, with strong top- and bottom-line growth driven by robust global demand for advanced semiconductor equipment. Net sales rose by 32.8% year-on-year to approximately ¥2.43 trillion (around $15.7 billion USD), marking the highest in the company's history. Operating profit surged to ¥697.3 billion (about $4.5 billion USD), supported by an improved operating margin of 28.7%. Growth was underpinned by increased investment in leading-edge logic and memory, particularly High Bandwidth Memory (HBM) and advanced DRAM nodes, where TEL maintained or expanded market share through key Process of Record (POR) wins in etch and wafer bonding technologies. Revenue contributions diversified geographically, with notable gains in South Korea and Taiwan, even as China remained a key market. TEL also demonstrated strong cash flow, increased its R&D and capital investments, and returned significant value to shareholders through dividends and buybacks. Looking ahead, TEL forecasts continued growth in FY2026, positioning itself to capitalise on accelerating AI, 2nm logic, and heterogeneous integration trends.

Tokyo Electron TEL has demonstrated strong financial performance and strategic market expansion through FY2025, according to their investor presentation dated April 30, 2025. Their net sales, gross profit, operating profit, and net income have all reached record highs, signaling both operational efficiency and favorable market conditions.

LINK: Tokyo Electron Limited 2025 Q4 - Results - Earnings Call Presentation (OTCMKTS:TOELY) | Seeking Alpha

Tokyo Electron's Q4 FY2025 earnings call highlighted strong financial performance and an optimistic forward outlook amid geopolitical uncertainties. Despite global concerns around US tariffs and export controls—particularly in China, which saw its WFE market share fall to 35%—TEL stated that it has not observed any significant changes in customer investment sentiment or competitive dynamics. The company reaffirmed its strategy of focusing on long-term innovation rather than short-term regulatory shifts, underscoring its commitment to developing higher-productivity tools to offset potential external headwinds. Looking ahead, TEL forecasts continued double-digit WFE market growth into calendar 2026, driven by AI infrastructure demand, 2nm logic, and HBM scaling. The company plans record-high investments of ¥300 billion in R&D and ¥240 billion in CapEx for FY2026, reflecting confidence in sustained momentum across DRAM, advanced logic, and packaging technologies. TEL aims to expand global market share and reach ambitious mid-term goals, including over ¥1 trillion in operating profit and 35%+ OPM, by capitalising on technology transitions such as GAA, backside PDN, and heterogeneous integration.

LINK: Tokyo Electron Limited (TOELY) Q4 2025 Earnings Call Transcript | Seeking Alpha

Revenue and Profitability Growth:

Net sales increased significantly from ¥1,399.1 billion in FY2021 to ¥2,431.5 billion in FY2025, a 74% increase over four years. The gross profit also rose steadily, reaching ¥1,146.2 billion in FY2025, up from ¥564.9 billion in FY2021. Operating profit followed suit, more than doubling from ¥320.6 billion to ¥697.3 billion. These trends underscore TEL’s ability to scale profitably, with operating margins rising from 22.9% in FY2021 to 28.7% in FY2025. Return on equity (ROE) also remained strong, peaking at 37.2% in FY2022 and settling at 30.3% in FY2025, a testament to effective capital management.

Regional Sales Composition:

The revenue breakdown by region from Q1 FY2024 to Q4 FY2025 shows growing diversification. Notably, China has remained the single largest market, although its share declined from 47.4% in Q4 FY2024 to 34.3% in Q4 FY2025, reflecting a strategic balancing across geographies. South Korea, Taiwan, and North America significantly increased their contributions, with South Korea reaching ¥147.0 billion and Taiwan ¥135.8 billion in Q4 FY2025. This reflects growing demand from advanced logic and memory fabrication customers in these regions.

In FY2025, Tokyo Electron’s semiconductor production equipment (SPE) sales reached ¥1.86 trillion, driven by a sharp rise in DRAM-related investments, particularly for high-bandwidth memory (HBM), which accounted for 31% of total sales. Non-volatile memory (NAND) remained stable at 7%, while non-memory segments, including logic and foundry, continued to dominate with 62%, reflecting robust demand from both advanced and mature nodes. The overall recovery and expansion of customer investments across segments underpinned this strong performance.

Market Segment Performance

Tokyo Electron’s global market share in CY2024 demonstrates its leadership across multiple core segments of the semiconductor production equipment market. The company holds a commanding 92% share in coater/developer systems, underlining its unparalleled position in photoresist processing for advanced lithography applications. It also leads the wafer prober segment with a 38% share and maintains robust positions in key deposition categories, including 38% in CVD and 37% in oxidation/diffusion systems. In contrast, TEL’s market share in ALD stands at 16%, notably behind ASM International, highlighting an opportunity for expansion in this strategically important technology as the industry moves towards GAA and other 3D device structures. Performance in dry etch (27%), cleaning systems (21%), and wafer bonding (32%) rounds out a broadly competitive portfolio that positions TEL to effectively support ongoing advancements in scaling, heterogeneous integration, and high-performance packaging across logic, memory, and AI-related applications.

To further expand our future profit, we made steady progress in penetrating into new technology domains. Specifically, we released multiple new outstanding products contributing to the semiconductor technology innovation. For example, penetration to untapped segments such as single-wafer plasma CVD and PVD, gas cluster beam system which improves efficiency of leading-edge lithography, and laser-lift-off system to drastically decrease environmental footprint of processing. In fiscal 2025, we conducted share repurchase of about ¥150 billion in total.

- Toshiki Kawai - Representative Director, President and CEO

 

New product 2025 Episode™ single-wafer CVD platform

Episode™ 1 is Tokyo Electron's latest single-wafer CVD platform, launched in 2024 to address the challenges of advanced device scaling in logic, DRAM, and future AI processors. It supports up to eight process modules, enabling complex, uninterrupted multi-step processing. The system integrates the OPTCURE™ module for native oxide removal and ORTAS™ for titanium CVD, allowing immediate Ti deposition to minimise contact resistance in advanced interconnects. Episode™ 1 replaces traditional PVD with CVD to achieve uniform, low-resistivity films in high aspect ratio structures such as deep contact holes. With a 45% smaller footprint than its predecessor and advanced edge computing, data analytics, and environmental tracking capabilities, the system enhances fab productivity, engineer efficiency, and readiness for new materials in next-generation device manufacturing.

The TEL Episode™ 1 system shown in the image seems to feature twin or dual single-wafer process chambers, which is typical in modular CVD tools designed for high throughput. Each visible module (with two load ports per unit) likely contains two process chambers within the same footprint to maximise wafer handling efficiency and enable parallel processing—common in tools aimed at advanced logic and memory manufacturing.

Episode™ 1 offers a reduced footprint. Compared with the Triase+™ series, twice as many smaller modules can be installed in a system. With the same number of modules installed, Episode™ 1 takes up about 45% less fab space than its predecessor

LINK: Episode™ 1 Single-Wafer Deposition System for Semiconductors: Driving the Evolution of AI Semiconductors to Transform Everyday Life | Blog | Tokyo Electron Ltd.

EU Business Hub | Semicon Japan 2024 Business Mission - Introducing AlixLabs AB

Introducing AlixLabs AB (Sweden): one of our selected companies to participate on the EU Business Hub at Semicon Japan 2024. 

During the recent EU Business Hub at Semicon Japan 2024 business mission that took place between the 9th and 13th of December, we witnessed the spark of global collaboration in action. European and Japanese companies participating in the mission shared their impressions – and their feedback reveals exciting opportunities on the horizon. 

The EU Business Hub at Semicon Japan 2024 mission stood out for its comprehensive approach to supporting European businesses seeking to enter the Japanese market: 

Tailored B2B Matchmaking: European companies had the chance to meet with key Japanese industry players through personalized B2B meetings, fostering future partnerships.

Market Intelligence & Local Expertise: Participants received valuable market insights and coaching on business culture, provided by the programme team, helping them navigate the Japanese market with ease.

Cultural & Linguistic Support: Expert interpreters and briefings on Japanese business culture ensured that each interaction was smooth and effective.

EU-Branded Pavilion: A platform for European companies at Semicon Japan 2024, showcasing cutting-edge solutions and elevating visibility among global tech leaders.

China Warns Japan Over Semiconductor Export Curbs as US Pressure and Economic Tensions Mount

China has issued strong warnings to Japan against imposing new restrictions on the sale and servicing of chipmaking equipment to Chinese firms, in response to pressure from the United States. The US is seeking to align Japan with its own restrictive measures aimed at curbing China’s semiconductor advancements. Japan is concerned about potential retaliation from China, particularly the possibility that China might cut off access to critical minerals essential for its automotive industry, which could severely impact companies like Toyota. This echoes past instances where China restricted exports of rare earths to Japan during diplomatic tensions.

The US is also considering more stringent restrictions on chipmaking tools and high-bandwidth memory chips, crucial for AI development, as part of its broader strategy to limit China's technological progress. However, the US has so far refrained from using the foreign direct product rule (FDPR) against Japan, a powerful measure that could control sales of products worldwide if they use any American technology. While diplomatic efforts continue, the situation is complicated by upcoming political changes in Japan and the US, with Japan seeking to ensure its supply chain security while managing pressure from both China and the US.

China's heavy reliance on Japan for crucial semiconductor materials and equipment, such as high-end photoresists and wafer processing tools, significantly complicates its stance in the ongoing tech war with the US and Japan. Four Japanese companies—JSR, Tokyo Ohka Kogyo, Shin-Etsu Chemical, and Fujifilm Electronic Materials—dominate the global market for advanced photoresists, holding about 70% of the market share, making China highly dependent on them despite efforts to develop its own production capabilities. Additionally, Japan's Tokyo Electron, Screen Holdings, Nikon, Kokusai, and Lasertec are key suppliers of semiconductor wafer processing equipment to China. Japanese chemical companies, such as ADEKA Corporation, JSR Corporation, and Mitsui Chemicals, are key suppliers of CVD and ALD precursors. These companies produce a range of specialized chemicals used in semiconductor manufacturing, including organometallic precursors, silanes, and other complex compounds essential for deposition processes.

Japan's exports rose 5.4% year-on-year in June, cooling from 13.5% growth in May and underscoring concerns that a slowdown in China may hamper Japan's trade-reliant economy. The trade balance came to a surplus of 224.04 billion yen.

In June 2024, Japan's export growth slowed to 5.4% year-on-year, down from 13.5% in May, raising concerns that a slowdown in China could negatively impact Japan's trade-dependent economy. Despite a weak yen boosting the value of exports, the actual volume of exports declined by 6.2%, highlighting the challenges Japan faces with sluggish external demand. Exports to China, which grew by 7.2%, were primarily driven by chip-making equipment, but this growth was significantly lower than the 17.8% increase seen in May. The trade balance swung to a surplus of 224 billion yen, as imports grew less than expected, marking Japan's first trade surplus in three months. However, analysts express concern over the lack of a strong export growth engine among Japan's trading partners, including the United States, Europe, and China.

This dependency on Japanese technology and materials puts China in a vulnerable position as Japan faces increasing pressure from the US to align with stricter export controls, further raising the stakes in the ongoing geopolitical and economic tensions.

Sources

China Warns Japan of Retaliation for Possible New Chip Curbs - Bloomberg

Japan export growth cools amid worries about China slowdown | Reuters