3-D memory swaying shares of chipmaking equipment makers
Japanese players with the right exposure leaving rivals in the dust
TOKYO -- Even as Japanese producers of semiconductor-manufacturing equipment reap the benefits of stepped-up capital spending by customers, stock investors are homing in on those standing to gain the most from the rise of 3-D memory.
"We have no blind spots," Tokyo Seimitsu Chief Financial Officer Koichi Kawamura said Tuesday while announcing first-half results. The company now sees group net profit jumping 13% to 11.2 billion yen ($98.7 million) for the fiscal year ending March 2018, up from the previously forecast 1% rise to 10 billion yen.
Six of seven leading players with March book-closings have upgraded full-year projections since the April-June quarter. Five expect record net profit.
But they have not benefited equally in the stock market. Tokyo Electron and Disco have seen their prices roughly double since the end of last year, while Hitachi High-Technologies and Advantest have risen just 8% and 24%.
Key to explaining these disparities is 3-D memory, which offers significantly more capacity than its conventional 2-D counterpart and faces surging demand from data centers and other operations. Global 3-D memory shipments are expected to jump 140% in 2017, according to U.S.-based research company Gartner.
Tokyo Electron is known for machinery used in etching -- a process especially more complex in 3-D chips. The high-end systems required by the cutting-edge semiconductors have pushed up the company's per-unit prices.
Disco, meanwhile, controls 70-80% of the global market for polishing machines and saws. It has benefited significantly from new investments, particularly related to fabricating 3-D chips.
Companies focused on test equipment have not fared as well. Growth in Hitachi High-Tech's chip-related sales languishes in the single digits. Advantest has actually downgraded its net profit forecast for this year, partly to compensate for surging smartphone-related demand in China last fiscal year.
"Testing equipment and other products will experience less direct benefits from the shift to 3-D," said Hisashi Moriyama of JPMorgan Securities Japan.
"Chipmaking equipment stocks are rising too quickly, and there will be a correction at some point," a source at a Japanese brokerage said.
Still, many market watchers remain bullish. "The current boom tied to semiconductors is backed by actual demand and will likely continue at least until the latter half of 2018," said Tetsuya Wadaki of Nomura Securities.