Japan Chip Tool Makers Turn Cautious on China Uncertainty

(Bloomberg) — Japanese chip gear makers trimmed their revenue forecast for fiscal 2025, citing fears of a slowdown in spending in China as well as by makers of automotive and power chips.

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The Semiconductor Equipment Association of Japan said it now expects 5% revenue growth to ¥4.66 trillion ($30 billion) in the year to March 2026, down slightly from the ¥4.68 trillion forecast it gave in July. The muted outlook contrasts with 20% revenue growth it now expects in the 12 months to this March and heavyweight customer Taiwan Semiconductor Manufacturing Co.’s expectation of as much as a 40% growth in capital spending this year.

Chinese chipmakers who spent aggressively last year are expected to focus on raising usage rates rather than buying up new equipment, the SEAJ said in a statement Thursday. Still, robust demand for artificial intelligence chips as well as for power-efficient and high-capacity semiconductors is bolstering investment in cutting-edge equipment, it said.

The association, which includes Tokyo Electron Ltd., Advantest Corp., Screen Holdings Co. and Disco Corp., said it expects 10% revenue growth in the fiscal year starting April 2026. That’s despite export curbs that restrict shipments of Japanese tools used to make the most advanced chips and US efforts to curtail shipments of AI knowhow to China.

Overall chip demand is expected to grow in 2025, led by AI chips, especially those made by US companies, said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. But the sector may be approaching an adjustment phase as excess production capacity builds up, he said.