Risk of a sharp decline in capital investment due to changes in the economic environment and semiconductor supply-demand conditions

「半導体メーカーによる設備投資は当初の想定を上回る水準となっています。こうした市場環境を背景に、当社の半導体製造装置に対する需要も想定を上回って推移しています。」

「The Group got off to a weak start due to the impact of US tariff policies, but as general-purpose memory investment, mainly for server applications, recovered from the second half, it steadily captured demand for its molding equipment, which has a strong track record of adoption in the memory sector. As a result, the Group achieved record-high net sales.」

「The Group got off to a weak start due to the impact of US tariff policies, but as general-purpose memory investment, mainly for server applications, recovered from the second half, it steadily captured demand for its molding equipment, which has a strong track record of adoption in the memory sector. As a result, the Group achieved record-high net sales.」

「During the current interim consolidated accounting period, the Group's performance declined in both revenue and profit year on year, as orders had remained weak since the second half of the previous fiscal year due to sluggish demand for consumer products and memory semiconductors, as well as the impact of US tariff policies, resulting in a significant drop in first-quarter net sales. In the second quarter, however, semiconductor capital investment gradually recovered, mainly in China, Taiwan and other parts of Asia, putting orders and net sales on an upward trend.」

「Investment in high-performance semiconductors, primarily for generative AI, remained solid, but investment for consumer products such as PCs and smartphones and for industrial equipment continued to stagnate due to weak end demand and prolonged inventory adjustments.」

「Investment related to generative AI and investment to bring semiconductor production in-house in China remained solid, but although operating rates for consumer products were gradually improving, investment had not yet reached a full-scale recovery.」

「Although sales of molding equipment and molds for automotive semiconductors remained strong, sales for consumer products such as PCs and smartphones were sluggish, resulting in a year-on-year decline in net sales.」

「Although capital investment for automotive and power semiconductors remained strong, following the previous period, investment for consumer products such as PCs and smartphones was sluggish, resulting in a year-on-year decline in net sales.」

「Demand for PCs and smartphones remained stagnant due to the slowing Chinese economy and weaker consumer spending, and investment plans were postponed, particularly for memory semiconductors. However, investment to increase production of automotive and power semiconductors remained solid, and conditions remained resilient.」

「While capital investment showed signs of slowing as demand for PCs, smartphones and other products declined due to weaker personal consumption, capital investment remained solid in increasing production of automotive and power semiconductors for the expanding electric vehicle market.」

「Investment to increase production of automotive semiconductors, including those for EVs, and power semiconductors remained active, following the previous period, resulting in net sales of ¥1.358 billion, up ¥263.4 million, or 24.1%, year on year.」

「The semiconductor manufacturing equipment industry in which we operate continued to enjoy strong market conditions, supported by investment to expand production capacity to resolve the global semiconductor shortage, active investment in domestic semiconductor production in China, and investment to restructure semiconductor supply chains from an economic security perspective.」

「The semiconductor manufacturing equipment market in which we operate also remained buoyant, as manufacturers actively invested in increasing production to meet strong semiconductor demand and in domestic semiconductor production in China.」

「The semiconductor manufacturing equipment market in which we operate also remained buoyant, as manufacturers actively invested in expanding production capacity to address the global semiconductor shortage and meet expected future demand, as well as in equipment to support domestic semiconductor production in China.」

「Against this backdrop, the Group's performance during the first quarter of the current cumulative consolidated accounting period benefited from continued strong orders, driven by capital investment to address the global semiconductor shortage and anticipated future demand growth, as well as accelerating efforts to bring semiconductor production in-house in China. Group orders in the first quarter totaled ¥1.8369 billion, a record high for quarterly orders.」

「In response, semiconductor manufacturers stepped up capital investment to strengthen their supply capabilities, and strong market conditions continued.」

「As semiconductor manufacturers' appetite for capital investment continued to strengthen, the company reliably met their needs as a leading semiconductor molding equipment manufacturer. As a result, performance remained solid, including record-high orders of ¥1.4063 billion in the third quarter.」

「Performance in the semiconductor manufacturing equipment business remained solid, as Taiwanese OSATs, which had been taking a wait-and-see approach to capital investment since the previous fourth quarter, resumed investment amid expanding demand related to 5G, while strong investment in China continued, driven in part by efforts to bring semiconductor production in-house.」

「Amid uncertainty over the outlook due to concerns about a prolonged economic slowdown resulting from the spread of COVID-19 and the intensifying US-China trade war, some capital investment plans and scheduled equipment installations were postponed.」

「In the semiconductor manufacturing equipment business, sales of equipment using TOWA’s proprietary compression technology remained firm in the period under review, but the decline during the first-quarter consolidated accounting period, from April to June 2019, which was heavily affected by the US-China trade war, resulted in net sales of ¥16.371 billion, down ¥2.890 billion, or 15.0%, year on year. On the earnings front, growth in sales of highly profitable compression equipment eliminated the operating loss recorded through the six months ended the second quarter, resulting in operating profit of ¥96 million for the nine months ended the third quarter, down ¥354 million, or 78.6%, year on year.」

「In the semiconductor manufacturing equipment business, net sales were ¥990.7 million, down ¥422.7 million, or 29.9%, year on year, as companies remained cautious about capital investment against the backdrop of the US-China trade war and other factors, and a full-scale recovery in semiconductor market conditions was slower than anticipated.」

「In the semiconductor manufacturing equipment business, earnings were significantly affected by customers' investment decisions as a result of falling memory prices, slowing smartphone demand and uncertainty over the outlook due to the US-China trade war, while the recovery in investment sentiment took longer than expected. As a result, revenue was ¥3,805 million, down ¥3,443 million, or 47.5%, year on year.」

「In addition, customer demand for capital investment fell sharply due to factors including the US-China trade war, and sales of semiconductor manufacturing equipment and molds declined as a result, causing net sales to fall ¥422.7 million, or 13.0%, below plan.」

「Memory prices continue to fall as the supply-demand balance deteriorates, with no clear indication of a bottom, leaving semiconductor manufacturers unable to commit to capital investment. In addition, the market environment has deteriorated significantly as the slowdown in smartphones, memory and the Chinese market, which had driven the market to date, has been compounded by a sharp decline in capital investment in China due to the impact of the US-China trade war.」

「Memory demand, which had remained at a high level through the previous fiscal year, reached a plateau, and memory manufacturers' capital investment stagnated.」

「The semiconductor manufacturing equipment business operated by the Group is significantly affected by capital investment by semiconductor manufacturers, which is based on demand for end products such as electronic devices, economic conditions in the regions where those products are consumed, and fluctuations in semiconductor prices resulting from changes in the balance of semiconductor supply and demand. However, if a global financial crisis or economic turmoil occurs, semiconductor manufacturers could sharply reduce their capital investment.」