Tokyo Electron lifts forecast 12.7% on AI chip spending surge
¥150B share buyback accompanies profit outlook upgrade as semiconductor equipment demand accelerates
Tokyo Electron has raised its annual net profit forecast by 12.7 per cent to 550 billion yen ($3.51 billion) for the fiscal year ending March 2026, joining the semiconductor equipment makers capitalizing on surging investment in artificial intelligence infrastructure. The Japanese chipmaking equipment supplier also announced a share buyback of up to 7.5 million shares worth 150 billion yen, signaling confidence in the sustained demand for advanced chip production tools.
The revised guidance comes as global semiconductor manufacturing equipment sales are projected to reach $145 billion in 2026 and $156 billion in 2027, with AI-related investments driving growth in leading-edge logic, memory, and advanced packaging technologies. Industry analysts expect AI-related spending within equipment investments to increase from 30 per cent in 2024 to 40 per cent by 2025, creating a substantial opportunity for companies positioned in the high-end semiconductor supply chain.
Tokyo Electron, which holds approximately 12 per cent of the overall Wafer Fab Equipment market and 20 per cent of the DRAM equipment market, has trailed some competitors in recent quarters. The company's shares fell 17 per cent in 2025, making it one of the weaker performers in the NYSE FactSet Asia Semiconductor Index, partly due to its significant reliance on customers like Samsung and Intel that have not fully benefited from the AI surge. However, the stock has recovered strongly, gaining 85 per cent between August 2025 and January 2026.
The company's bullish outlook contrasts with the performance of Dutch rival ASML, which has seen its shares surge nearly 80 per cent over the past year after reporting record orders of €13.15 billion in the fourth quarter of 2025—an 88 per cent year-over-year increase. ASML's extreme ultraviolet lithography technology dominates the market for producing the most advanced chips, giving the Dutch company a competitive edge in the AI chip race. Applied Materials, another key competitor, has also delivered strong returns, with its stock up 78.2 per cent over the past year.
Despite facing competitive pressures, Tokyo Electron is strategically positioning itself to capture growth in specific niches. The company aims to increase its revenue share from AI-related semiconductor equipment to approximately 40 per cent by the fiscal year ending March 2026, up from 30 per cent. Tokyo Electron is particularly strong in etching and wafer bonding technologies, which are critical for producing advanced memory chips used in AI applications. The company plans to invest in a new factory for circuit etching equipment to compete with rivals like Lam Research, capitalizing on the increasing demand for AI chips.
Analysts anticipate Tokyo Electron's earnings per share to increase by 29.1 per cent to $4.17 in the coming year, reflecting the company's improved outlook. The share buyback program, which represents roughly 3 per cent of the company's outstanding shares, will boost earnings per share and demonstrate management's confidence in the business fundamentals.
The semiconductor equipment sector faces some challenges, including export restrictions to China and potential overcapacity concerns. Tokyo Electron experienced an 18 per cent share price drop in August 2025 after it lowered its full-year earnings forecast, citing weaker demand from logic chip producers and reduced spending in China. However, the company's latest guidance suggests those headwinds are abating as AI-driven demand strengthens.
Looking ahead, Tokyo Electron plans to invest 1.5 trillion yen ($9.5 billion) in research and development by March 2029, underscoring its commitment to maintaining technological leadership in the competitive semiconductor equipment market. The company's long-term strategy aligns with industry forecasts that the global semiconductor market will exceed $1 trillion by 2030, with AI-related semiconductors accounting for 70 per cent of growth.
The ¥150 billion share repurchase program, combined with the upgraded profit forecast, positions Tokyo Electron to deliver value to shareholders while investing in the technologies needed to compete in the AI era. As the semiconductor equipment market enters what analysts anticipate will be a multi-year expansion cycle, Tokyo Electron's renewed optimism reflects growing confidence that the company can leverage its core competencies to capture a meaningful share of the AI-driven spending boom.