Tokyo Electron Rides AI Wave: Record Sales and a New Guidance Rhythm

The semiconductor equipment leader raises its WFE outlook, targets 50%+ gross margins, and shifts to half-year guidance as AI-driven demand for coater/developers and etching systems accelerates.

8035.T · Earnings Call · 2026-05-04

Record Results and a Raised Bar

Tokyo Electron closed fiscal 2026 with record net sales of ¥2,443.5 billion and record net income of ¥574.4 billion, fueled by a buoyant WFE market and Field Solution sales that grew 16.3%. Management now expects the WFE market to expand 20% or more from calendar 2025, landing between $150 billion and $170 billion in each of the next two years. “At present, we are receiving new inquiries. Some request for delivery could be put forward to this year. But as for this year, maybe $150 billion or more and going toward $170 billion next year.” — Toshiki Kawai, Executive (Presenter, likely senior management) · 2026-05-04 This marks a distinct step-up from earlier, more cautious stances. In early 2025 the company was still braced for a decline in Chinese non-memory investment: “We will expect the decline in Chinese market for non-memory areas, 10% to 20% decline is expected in China.” — Toshiki Kawai, Senior Executive / Presenter · 2025-02-06 The current call instead leans heavily on AI-driven demand across DRAM, HBM, and advanced logic.

A Surprising Disclosure Change

The more consequential shift for investors is a change in how Tokyo Electron presents its outlook. Starting fiscal 2027, the company will no longer issue a full-year forecast at the year-end release; instead, it will provide half-year estimates, citing the growing size and volatility of customer investment plans.

from fiscal 2027 onward, we will disclose financial estimate of the first half of fiscal year, and thereby we will strive to share more timely and realistic information.
Toshiki Kawai, Executive (Presenter, likely senior management) · 2026-05-04

The move aligns with management’s confidence in near-term order visibility. When asked about the first half, Kawai responded, “For the first half of this fiscal year, yes, this rather high level of confidence for the figures for first half of this year.” — Toshiki Kawai, Executive (Presenter, likely senior management) · 2026-05-04 But it also signals that the company wants flexibility in a world where customer plans can shift midyear—a prudent acknowledgment of the risky environment.

Product Drivers: Coater/Developers and Etching

The company is counting on its core franchise. Coater/developer sales are expected to jump 50% or more year-over-year in fiscal 2027, while Etch system sales should rise nearly 30%. Advanced Packaging—including bonders, debonders, and laser lift-off—is targeted for 60% growth. Management highlighted strong POR wins across front-end to 3D integration. “So coater/developer, regarding coater/developer... EUV-related demand and EUV multi-patterning... So we have incorporated all those needs or demands.” — Toshiki Kawai, Executive (Presenter, likely senior management) · 2026-05-04 This is a continuation of the company’s long-running strength, but the magnitude of expected growth is new. The company also explicitly mentioned silicon photonics as an area of opportunity, responding to a question from the analyst for the first time in this context.

Geopolitical Watch: The Strait of Hormuz

Management flagged a fresh risk factor that wasn't highlighted in prior calls to the same degree: a protracted blockage of the Strait of Hormuz could disrupt supply chains. “When the blockage of the Strait of Hormuz is protracted, however, we must pay close attention as there is a concern about the shortage of parts and materials triggered by supply chain disruption.” — Toshiki Kawai, Executive (Presenter, likely senior management) · 2026-05-04 This adds a layer of uncertainty to an otherwise bullish outlook, but also underscores how central AI infrastructure spending has become to the company’s growth trajectory. Tokyo Electron’s record results and raised guidance come amid a global backdrop where AI infrastructure spending is accelerating, and the company is well positioned to benefit from the memory and advanced packaging side of that wave—complementing the broader AI narrative.