Artificial intelligence fueled a stronger-than-expected earnings season for Japan’s tech sector, with surging data-center demand prompting chipmakers and equipment suppliers to raise forecasts.
After reporting, over three-quarters of companies in the MSCI Japan Information Technology Index surpassed analyst predictions, which is among the highest in the wider MSCI Japan Index.
According to reports, profits throughout the index increased by 35percent, with Advantest Corp. being one of the largest contributors.
The positive forecasts from major suppliers and renewed governmental backing are driving momentum in Japan's chip resurgence, yet the earnings season revealed an expanding gap in the worldwide chip sector: demand spurred by AI keeps boosting profits, while automotive industry suppliers are still facing challenges.
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Tokyo Electron Ltd. increased its annual operating profit outlook, as analysts anticipate robust demand for semiconductor manufacturing equipment to persist into next year due to significant capital investment by chip manufacturers.
The forecast for 2026 has also strengthened, as Berenberg analyst Tammy Qiu highlighted that the company anticipates wafer fabrication equipment expenditures to hit an all-time high due to the rise in DRAM and NAND investments.
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According to Masahiro Wakasugi and Takumi Okano, increasing complexity in chips is anticipated to enhance the demand for its equipment.
The demand for DRAM and NAND chips from customers such as SK Hynix Inc. and Samsung Electronics Co. is expected to increase in the next fiscal year due to data centers enhancing their capacity, they noted. The firm commands roughly 90percent of the market for tools used in photoresist coating and chip wafer development.
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Advantest increased its annual operating profit prediction by 25percent to ¥374 billion. Rising adoption of high-bandwidth memory chips is driving robust demand for its premium chip testing equipment.
According to reports, the global market share of the Nvidia Corp. supplier in the $1.9 billion memory chip testing sector rose by 7 percentage points to 63percent in its most recent fiscal year compared to the prior year.