Tokyo Electron market cap hits record high of $12bln/day

By Aya Anwar On Feb 13, 2024

Tokyo Electron Ltd.’s market capitalisation reached a record high on Tuesday, rising by over $12 billion, following the company’s increase in its full-year guidance due to strong sales to China, Bloomberg reported.

The manufacturer of chipmaking equipment saw a 13 per cent increase in value on Tuesday in Tokyo, closing at its highest close ever, valued at ¥15.9 trillion ($106 billion). It occurred after the business increased its operating income projection to ¥445 billion, or 11 per cent, for the year ending in March. This came after a December quarter in which 46.9 per cent of its sales came from China, exceeding analyst expectations.

Due to U.S. trade restrictions, Chinese semiconductor companies are unable to obtain the best chips for projects like artificial intelligence development, so demand for their acquisition of legacy equipment is rising.

Tokyo Electron added that it anticipated a rise in DRAM manufacturers’ investment this year. Being bullish in light of growing AI-driven demand, the stocks of two of its clients, Samsung Electronics Co. and SK Hynix Inc., both based in South Korea, grew.

“We have entered a frenzy stage of buying anything tech,” Amir Anvarzadeh of Asymmetric Advisors stated. Tokyo Electron’s growth came after the market value of chip designer Arm Holdings Plc nearly doubled due to higher-than-expected earnings and a corresponding increase in the parent company’s stock, SoftBank Group Corp.

“However, given that China has been the biggest single engine for Tokyo Electron, we see big risks that have been ignored.”

An executive from the company expressed optimism, predicting continued strong sales in China for the next year or two.

“We expect strong demand from China to continue or grow stronger still,” deputy general manager Hiroshi Kawamoto said on an earnings call last week. China only makes a small percentage of the chips it needs, and Kawamoto sees the country investing aggressively to lower its reliance abroad. “We expect momentum to remain intact through 2025.”