Tokyo Electron cuts outlook on US chip export restrictions

Major chip equipment supplier Tokyo Electron Ltd slashed its full-year outlook yesterday after memory chipmakers cut spending and the United States tightened restrictions on chip equipment exports. advanced chip manufacturing to China.

The company now expects annual operating profit of 546 billion yen ($3.7 billion), down 24% from its previous forecast, despite quarterly revenue growth worldwide. Its caution echoes the pessimism of its American rivals, such as Applied Materials Inc and Lam Research Corp.

Tokyo Electron would not try to take advantage of an opportunity created by U.S. restrictions on its U.S. peers, Hiroshi Kawamoto, general manager of the company’s finance unit, told a news conference.

Photo: Reuters

“We understand that US manufacturers may have difficulty doing business with Chinese customers. We will not try to fill the void they leave,” he said.

The company was operating at nearly full capacity, with lead times of several months for the delivery of equipment.

With a customer list that includes Semiconductor Manufacturing International Corp (中芯國際) and Yangtze Memory Technologies Co (長江存儲), Tokyo Electron derives around a quarter of its revenue from China, although that number includes overseas companies that there are factories.

Japan’s exports of chipmaking equipment to China have hit record highs so far this year, up more than 20 percent year-on-year in the third quarter.

“U.S. sanctions will cause Chinese manufacturers to cut capital expenditures, leading to delivery delays,” Kawamoto said.

US President Joe Biden’s administration has announced sweeping regulations to limit sales of its advanced semiconductors and chipmaking equipment to China, upending the US$550 billion globally interconnected industry.

While the move dealt a blow to China’s chip industry, it imposed tough restrictions on U.S. semiconductor equipment firms that are expected to cost them billions of dollars in revenue.

This was in addition to spending cuts announced by memory chipmakers from SK Hynix Inc to Micron Technology Inc.

The United States has signaled to its allies its desire that they follow suit on export controls to limit China’s access to critical chip technologies.

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