Yahoo Finance Tokyo Electron Cuts Outlook on US Chip Curbs, Memory Slump
(Bloomberg) -- Key chip equipment supplier Tokyo Electron Ltd. slashed its full-year outlook after memory makers cut spending and the US ramped up restrictions on cutting-edge chip-gear exports to China.
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The Tokyo-based company now sees an annual operating income of 546 billion yen ($3.7 billion), down 24% from its previous forecast, despite quarter-on-quarter revenue growth worldwide. Its caution echoes pessimism at American rivals such as Applied Materials Inc. and Lam Research Corp.
Tokyo Electron will not try to take advantage of an opportunity created by the US restrictions on its US peers, Hiroshi Kawamoto, general manager of the company’s finance unit, said at a news conference Thursday.
“We understand US makers may be facing difficulties doing business with Chinese customers. We won’t try to fill the hole they leave,” he said. The company has been operating at near-full capacity, with months-long wait-times for equipment delivery.
With a client list that includes Semiconductor Manufacturing International Corp. and Yangtze Memory Technologies Co., Tokyo Electron earns roughly a quarter of its revenue in China, although that number includes foreign firms with factories there.
Japan chip gear exports bound for China are at record highs so far this year, up more than 20% in the September quarter from a year earlier.
“US sanctions will prompt Chinese makers to cut capital spending, leading to delays on deliveries,” Kawamoto said.
US President Joe Biden’s administration announced sweeping regulations to constrain sales of its cutting-edge semiconductors and chipmaking equipment to China, roiling the globally interconnected $550 billion industry.
While the move dealt a major blow to China’s chip sector, it saddled American semiconductor equipment firms with stringent restrictions that will cost them billions of dollars in revenue. That was on top of spending cuts announced by memory makers from SK Hynix Inc. to Micron Technology Inc.
Washington has signaled to its allies its wish that they follow suit on export controls to restrict China’s access to critical chip technologies. American officials have said that if allies do not align with the US efforts, their rules would lose effectiveness over time.
--With assistance from Debby Wu, James Mayger and Ian King.
(Adds comment from company news conference in fourth paragraph; an earlier version corrected SMIC’s name in fifth paragraph)
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