TOKYO -- At a semiconductor factory in China, an engineer in white clean-room garb intently follows the instructions coming through a pair of smart glasses on how to fix one of the machines.
"Turn more to the right," a seasoned technician at Tokyo Electron's headquarters in Japan says through the device. "That's it -- let's swap out that part."
Tokyo Electron's chipmaking equipment already comes with sensors for collecting such data as temperature and pressure, so it can remotely monitor them with clients' consent and analyze more than 1,000 types of data for signs of malfunctions.
But the company went a step further in 2020 by launching a remote technical support service using smart glasses -- a particularly helpful option in the midst of the pandemic, when sending repair specialists in person is not always possible.
With no clear end in sight to coronavirus travel restrictions, Tokyo Electron sees remote support services as a pillar of future growth. In addition to helping clients operate smoothly, it hopes to employ the collected data in research and development.
The smart-glasses-assisted repair service is still a work in progress. But it is already allowing less-experienced local staffers to tackle parts changes and other fixes, with the help of schematics and real-time instructions from seasoned Tokyo Electron technicians displayed on the lenses.
Such remote solutions were not always the norm. Semiconductor factories have extremely strict rules to protect sensitive information, like banning smartphones or any external communications from their premises. To comply with these rules, Tokyo Electron used to send roughly 1,000 technicians to client facilities in person each month until 2019 to install and repair chipmaking equipment.
But travel restrictions due to the coronavirus has forced the company to consider alternatives. "Practically no one from the company travels from Japan overseas anymore," Tokyo Electron director Kiyoshi Sunohara says.
Instead, Tokyo Electron has expanded its TELeMetrics service, where it remotely collects data from its equipment at client facilities in order to identify and troubleshoot problems. The company experienced a 40% surge in TELeMetrics contracts in the six months starting March 2020, much of it from China, as more facilities lifted bans on smart devices and external communications.
At one company, Tokyo Electron found that the equipment was experiencing less wear than expected. This allowed the company to wait twice as long between parts changes, which cut costs and improved operational efficiency.
Tokyo Electron has shipped out more than 74,000 units of chipmaking equipment over its lifetime and continues to add about 4,000 to the tally each year. While some clients hesitate to provide data from their facilities, about 30% now take advantage of the remote monitoring.
The resulting trove of data provides a major boon to Tokyo Electron, both for its chipmaking equipment as well as for related services.
Tokyo Electron is investing a record 135 billion yen ($1.24 billion) in R&D for the fiscal year ending March 31. Detailed data on how its machines are being used and what issues they face can give it an edge over the competition.
The company is also placing a greater emphasis on recurring revenue sources, such as maintenance and repairs. Sales of new equipment fluctuate based on market conditions, but demand for support services tends to be more stable.
Tokyo Electron sees these so-called field solutions as a driver of future growth. Sales from these services jumped 18% on the year for the April-December period to equal around 30% of consolidated net sales.
In November, Tokyo Electron launched a new hub for digital technologies in the northern Japanese city of Sapporo. TEL Digital Design Square, as it is called, will provide data-driven recommendations to clients on how to run their specific facilities as efficiently as possible.
"Field solutions have a higher profit margin than new chipmaking equipment, since they require less R&D spending, which is another plus," President and CEO Toshiki Kawai says.
Tokyo Electron on Jan. 28 upgraded its forecast for the year ending March 31, now expecting group net profit to increase 24% to 230 billion yen on record net sales of 1.36 trillion yen.
Its outlook for the coming fiscal year is bright as well, as demand for smartphone chips remains strong.
The global shortage of automotive chips provides further tailwinds. Chips used in cars are often made using older technology, sometimes with equipment more than two decades old. Tokyo Electron expects greater demand for repairs and other field solutions in the sector.
But there are concerns as well. Some automakers are now placing duplicate orders in a desperate attempt to secure more chips. If chipmakers attempt to fulfill all of them, a glut could result.
Tokyo Electron's operating profit sank 24% for the year ended March 2020 on a downturn in the memory chip market. Its performance ultimately depends on the often-fickle semiconductor industry.
Such rivals as Applied Materials and ASML are also working on remote services that use augmented reality and other cutting-edge technologies. Competition is shifting away from the simple sales of chipmaking equipment to the development of new services that generate a steady stream of income even when the chip industry as a whole struggles.