The Semiconductor Market’s Silicon Cycle and Fluctuations in Customer Capital Spending

「During the current consolidated fiscal year, investment in data centers continued to expand against the backdrop of growing demand for generative AI, and demand for high-performance semiconductors such as advanced logic and HBM (High Bandwidth Memory) remained high. While demand for PCs and smartphones showed a gradual recovery, power semiconductors showed weakness against the backdrop of slowing EV demand, resulting in differences in conditions by application.」

「During the current interim consolidated accounting period (the “current period”), demand for semiconductors used in smartphones and PCs had not recovered fully, while high demand continued, led by generative AI applications.」

「During the current consolidated fiscal year (the “current period”), full-scale recovery in demand for end products such as smartphones and PCs remained absent, while high levels of equipment investment continued in certain applications, including power semiconductors for EVs and high-performance semiconductors related to generative AI.」

「During the current interim consolidated accounting period (the “current period”), equipment investment for semiconductors used in smartphones and PCs remained sluggish, while active investment was seen in specific applications, including generative AI-related applications.」

「During the current consolidated fiscal year, the semiconductor market was supported by continued demand for power semiconductors against the backdrop of the global shift to EVs and progress in decarbonization, as well as expanding demand related to generative AI, despite weak demand for semiconductors used in smartphones and PCs.」

「During the first nine months of the current consolidated cumulative period (the “current period”), demand for semiconductors used in smartphones and PCs remained weak, while strong demand for power semiconductors continued against the backdrop of the global shift to EVs and progress in decarbonization. Against this market backdrop, shipments of precision processing equipment remained solid, led by power semiconductor applications. Shipments of precision processing tools, which are consumables, followed an upward trend in line with customers’ equipment utilization rates.」

「During the first six months of the current consolidated cumulative period (the “current period”), demand for semiconductors used in smartphones and PCs remained weak, while strong demand for power semiconductors continued against the backdrop of the global shift to EVs and progress in decarbonization. Against this market backdrop, shipments of precision processing equipment remained solid, led by power semiconductor applications. Shipments of precision processing tools, which are consumables, followed a gradual upward trend in line with customers’ equipment utilization rates.」

「During the first quarter of the current consolidated cumulative period (the “current period”), demand for semiconductors used in smartphones and PCs remained weak, while strong demand for power semiconductors continued against the backdrop of the global shift to EVs and progress in decarbonization. Against this market backdrop, shipments of precision processing equipment remained solid, led by power semiconductor applications. Meanwhile, shipments of consumables, namely precision processing tools, which had continued to decline through the previous quarter, turned upward, showing signs of bottoming out.」

「During the current consolidated fiscal year (the “current period”), applications for high-volume production declined because of weaker demand for consumer devices such as smartphones and PCs. At the same time, demand for semiconductor manufacturers’ research and development applications remained solid, while strong demand for power semiconductors continued against the backdrop of the global shift to EVs and progress in decarbonization.」

「During the first nine months of the current consolidated cumulative period (the “current period”), the semiconductor market saw a decline in applications for high-volume production due to weaker demand for consumer devices such as smartphones and PCs. Meanwhile, strong demand for power semiconductors continued against the backdrop of the global shift to EVs and progress in decarbonization.」

「During the first six months of the current consolidated cumulative period (the “current period”), demand for smartphones and consumer electronics weakened against the backdrop of accelerating global inflation and the slowdown in the Chinese economy, resulting in signs of deceleration in semiconductor applications for high-volume production. At the same time, strong demand for power semiconductors continued, driven by the accelerating shift to EVs, and customers’ investment appetite varied by application. Against this market backdrop, shipments of precision processing equipment remained high, led by grinders, while shipment value for precision processing tools, which are consumables, remained solid.」

「During the first quarter of the current consolidated cumulative period (the “current period”), customers, which are semiconductor manufacturers, generally maintained solid willingness to invest in equipment against the backdrop of semiconductor demand across a broad range of applications, including ICs and power semiconductors. Against this market backdrop, shipments of dicing saws and grinders, which are precision processing equipment, remained high. Shipment value for precision processing tools, which are consumables, also remained solid in line with customers’ equipment utilization rates and other factors.」

「As our group manufactures and sells products to semiconductor and electronic component manufacturers worldwide, it is affected by customers’ equipment investment and production trends. In particular, semiconductors are a market that changes according to the balance between supply and demand, and semiconductor manufacturers’ performance is affected by these movements, commonly known as the silicon cycle. Accordingly, if customers freeze equipment investment or reduce production because of a downcycle or unexpected market volatility, this could adversely affect our group’s performance.」

「During the first nine months of the current consolidated fiscal year (the “current period”), the market environment was affected by supply chain disruptions and supply constraints caused by COVID-19. Nevertheless, robust semiconductor demand continued across a broad range of applications, including 5G-related products and automotive applications, against the backdrop of accelerating global decarbonization. Against this market backdrop, customers, which are semiconductor manufacturers, continued to actively invest in equipment, resulting in high shipment levels for both dicing saws and grinders, which are precision processing equipment. In addition, customers’ equipment utilization rates remained high, supporting continued strong shipment value for precision processing tools, which are consumables.」

「Against this market backdrop, customers, which are semiconductor manufacturers, continued to actively invest in equipment. Shipments of dicing saws and grinders, which are precision processing equipment, remained at high levels, particularly in Asia. In addition, customers’ equipment utilization rates remained high, supporting continued solid shipment value for precision processing tools, which are consumables.」

「During the first quarter of the current consolidated cumulative period (the “current period”), semiconductor demand continued to expand from the previous quarter across a broad range of applications, including consumer electronics and automotive, driven by the spread of 5G and growing stay-at-home demand amid the COVID-19 pandemic. Against this market backdrop, customers, which are semiconductor manufacturers, continued to show strong willingness to invest in equipment. Shipments of dicing saws and grinders, which are precision processing equipment, remained strong, particularly in Asia, and shipment value reached a new quarterly high. In addition, customers’ equipment utilization rates remained high, supporting solid shipment value for precision processing tools, which are consumables.」

「Against this market backdrop, semiconductor manufacturers, our customers, maintained strong investment appetite throughout the fiscal year, and shipments of dicing saws and grinders, which are precision machining equipment, remained strong, mainly for Asia. In addition, shipments of precision machining tools, which are consumables, increased substantially as customer equipment utilization remained high.」

「During the cumulative third quarter of the current fiscal year (the "period"), shipments of both dicing saws and grinders, which are precision machining equipment, continued at high levels, mainly for semiconductor mass-production applications in Asia, as 5G-related markets expanded. Shipments of precision machining tools, which are consumables, remained firm as customer equipment utilization increased.」

「During the cumulative second quarter of the current fiscal year (the "period"), shipments of both dicing saws and grinders, which are precision machining equipment, continued at exceptionally high levels for semiconductor mass-production applications against a backdrop of expanding 5G-related markets, mainly in Asia. Shipments of precision machining tools, which are consumables, also remained at a high level, as customers not only maintained high equipment utilization but also increased inventories in response to the impact of the novel coronavirus and other factors.」

「During the period, demand increased across the semiconductor industry, particularly for smartphones and base stations related to 5G, and customer capital investment remained at a high level. Although the impact of the novel coronavirus was a concern, customers did not alter their investment plans. As a result, shipments of our precision machining equipment increased substantially, mainly for semiconductor mass-production applications, reaching a record quarterly shipment value. Shipments of precision machining tools, which are consumables, continued at high levels for both dicing blades and grinding wheels, as demand steadily increased in line with customers' high equipment utilization.」

「Although semiconductor manufacturers, our customers, remained cautious about capital investment in the first half, shipments of precision machining equipment remained firm as investment resumed in some high-volume production applications from the second half. In addition, shipments of precision machining tools, which are consumables, remained at a high level as customer equipment utilization showed signs of recovery.」

「Although semiconductor manufacturers, our customers, continued to take a cautious approach to capital investment in the first half, shipments of precision machining equipment remained firm as investment resumed in some high-volume production applications from the second half. Precision machining tools, which are consumables, remained at a relatively high level as the recovery in customer equipment utilization became more pronounced.」

「During the period, semiconductor manufacturers continued to take a cautious approach to capital investment, but some applications and projects provided support, keeping shipments of precision machining equipment firm. Precision machining tools, which are consumables, remained at a relatively high level as customers' equipment utilization showed signs of recovery.」

「During the period, investment appetite declined across the semiconductor market, but some applications and projects provided support, keeping shipments of precision machining equipment firm. Precision machining tools, which are consumables, remained at a relatively high level as equipment utilization showed signs of recovery in some regions and applications.」

「During the consolidated fiscal year (the "period"), capital investment was seen across a broad range of applications, mainly memory, in the first half, but investment appetite declined across the semiconductor industry from the second half. In addition, the absence of large-scale projects like those in the previous fiscal year contributed to a decline of just under 20% in sales of precision machining equipment, including blade dicing machines, grinders and laser saws.」

「Capital investment by semiconductor manufacturers during the cumulative third quarter (April-December; the "period") remained firm in the first half, but investment appetite declined in the second half due to seasonality and the impact of memory prices. As a result, although sales of precision machining equipment declined in the third quarter (October-December), demand remained firm in specific applications such as LEDs and power semiconductors.」

「Because there were no large-scale projects of the kind seen in the previous year, sales of both precision cutting equipment (dicing machines) and precision grinding equipment (grinders) declined, and sales of precision machining equipment fell approximately 10% year on year.」

「During the cumulative first quarter of the current fiscal year (the "period"), demand was strong across semiconductor applications, particularly data centers, and semiconductor manufacturers' capital investment remained at a high level. However, equipment sales declined, mainly for blade dicing machines, because some customers reviewed the timing of their capital investment and there were no large-scale projects of the kind seen in the previous year.」

「During the consolidated fiscal year (the "period"), demand for semiconductors and electronic components for smartphones and data centers was robust, resulting in strong capital investment from the beginning of the year.」

「During the cumulative third quarter of the current fiscal year (the "period"), semiconductor manufacturers maintained strong investment appetite against a backdrop of robust semiconductor demand. Although investment declined due to seasonality after the start of the second half, capital investment remained active and substantially above the level seen in a typical year.」

「During the cumulative second quarter of the current fiscal year (the "period"), capital investment was active across Japan, the United States and Europe, as well as Asia. Sales of precision machining equipment increased approximately 50% year on year, as shipments of both precision cutting equipment (dicing machines) and precision grinding equipment (grinders) remained firm across a broad range of semiconductor and non-semiconductor applications, particularly memory applications.」

「Although both precision cutting equipment (dicing machines) and precision grinding equipment (grinders) remained firm for memory applications, sales of precision machining equipment declined approximately 4% due to decreases in applications for electronic components and optoelectronics, which had performed well in the previous fiscal year.」

「Capital investment for memory applications, which became active mainly in Asia during the first half, remained firm from October onward. Sales of precision machining equipment in the third quarter (October-December) declined from the previous quarter, but shipments for memory applications supported both precision cutting equipment (dicing machines) and precision grinding equipment (grinders), keeping sales at a relatively high level.」

「During the cumulative second quarter of the current fiscal year (the "period"), capital investment by semiconductor manufacturers became more active, mainly in Asia. Although demand for electronic component applications was weak during the period, demand for precision cutting equipment (dicing machines) and precision grinding equipment (grinders), mainly for memory applications, remained firm, resulting in precision machining equipment sales declining approximately 10% year on year.」

「Capital investment gradually picked up in some parts of Asia. Sales of precision machining equipment fell approximately 20% year on year, as shipments of precision cutting equipment (dicing machines) and precision grinding equipment (grinders) were firm for logic IC applications, while shipments for electronic components and memory applications were weak.」

「Because our group manufactures and sells products to semiconductor and electronic component manufacturers worldwide, we are affected by trends in customers' capital investment and production. In particular, the semiconductor market changes according to the balance between supply and demand, and the performance of semiconductor manufacturers is affected by these movements, known as the silicon cycle.」