Tokyo Electron continues to win in the semiconductor industry. Management that takes steps 10 years into the future

“Going forward, balancing digitalization and greening will become a shared value for society. Semiconductors are essential for both. In the super-VUCA era, it is important to capture megatrends. We can expect technological innovation and market expansion for semiconductors.”
Tokyo Electron occupies one of the world's top 3 semiconductor manufacturing equipment $Tokyo Electron (8035.JP)$ Sales exceeded 2 trillion yen (fiscal year ending March 2022). Up 43.2% from the previous year. When asked about the cause of the rapid rise, CEO Kawai Toshiki first raised changes in the external environment.
Certainly the world's WFE (wafer fab equipment. The market (which is responsible for the front-end process of semiconductor manufacturing) is blowing with a growth rate of 40% or more in 2021, and there is no doubt that the company has ridden that trend.
However, on the other hand, Kawai emphasizes that “sales of our new equipment have increased by about 60%, and we were able to outperform market growth.” The reason her expression is full of confidence is probably because she is convinced that good performance is not the result of leaving it up to the wind.
Actually, there was an element of anxiety due to the tailwind. Supply chains have been divided due to the COVID-19 pandemic, and a global shortage of parts has occurred. There were also competitors that failed to catch the wind because procurement couldn't be done as expected, but Tokyo Electron's response was quick.
“As soon as the spread of COVID-19 began, we set up the COVID-19 Countermeasures Headquarters. One of the countermeasures is proactive procurement. Instead of just in time, we changed the arrangement period to a longer range.”
If procurement is made ahead of schedule, inventory may expand and costs may increase. Therefore, a new corporate production headquarters was established in 21/9. Procurement knowledge from each plant was consolidated, and sharing of components was promoted to improve inventory efficiency. When you hit one move, you also think about the next move, which is the river merging stream.
There are other foreshadowing that gave birth to the current strong performance. Strong tailwinds have been blowing in the market until now, but demand shrank 3 years ago. The company also fell into a decline in sales and profit in the fiscal year ending March 31, 2020. When business performance deteriorates, it is tempting to cut research and development expenses that have no impact on business results immediately, but Kawai continued to increase research and development expenses.
“What is important as an equipment manufacturer is whether they have strong next generation products. No matter what happens to the market, what is ultimately required is the most high-end device with the best performance in the world. We can't afford to neglect research and development, even for 1 year.”
Currently, the company boasts a 100% market share of coating imaging devices connected to EUV exposure machines. There are also many inquiries about cleaning devices that have introduced supercritical cleaning to prevent pattern collapse. Precisely because the brakes were not applied to research and development even when business performance deteriorated, these cutting-edge devices came out safely, and we were able to catch the current tailwind.