In a strategic move to capitalize on India’s burgeoning semiconductor industry, Tokyo Electron Ltd., Japan’s leading chip equipment manufacturer, is set to establish a team of engineers in the country. This initiative is expected to come to fruition around 2026, initially focusing on providing technical services to Tata Electronics Pvt.
The company’s CEO, Toshiki Kawai, has indicated that robotics will play an increasingly important role in this endeavor, with local engineers receiving both in-person and remote support from Japan. While specific details regarding the number of engineers to be hired remain undisclosed, this move underscores Tokyo Electron’s commitment to India’s semiconductor ambitions.
India, under the leadership of Prime Minister Narendra Modi, is actively pursuing a strategy to attract international electronics companies and chipmakers to establish manufacturing facilities within its borders. This initiative aims to bridge the technological gap with advanced economies, and companies like Apple Inc. are already ramping up production in India. Meanwhile, domestic giants like Tata Group are making significant investments in semiconductor fabrication plants. The Indian government is offering substantial incentives to support these ventures, creating a fertile ground for companies like Tokyo Electron, which specialize in the machinery and expertise needed for semiconductor production.
Tokyo Electron’s expansion into India aligns with its broader growth strategy. The company, based in Tokyo, is aiming to hire 10,000 new employees globally over the next five years, reflecting the surging demand for domestic chip manufacturing across various countries. As a key supplier to industry giants like Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung Electronics Co., SK Hynix Inc., and Intel Corp., Tokyo Electron is well-positioned to benefit from this global trend.
For the current business year ending in March, Tokyo Electron is projecting record revenue and operating profit, fueled by a surge in demand for chips, particularly in areas like artificial intelligence (AI), autonomous vehicles, and energy efficiency. Despite pressures from the United States to tighten restrictions on exporting advanced chipmaking equipment to China, Tokyo Electron remains optimistic about the global demand for its machines.
The US government has been urging Japan to limit Tokyo Electron’s ability to service certain equipment in China, but Kawai believes that the global importance of semiconductors will ensure continued investment in chipmaking technologies worldwide. Tokyo Electron has already committed to supporting Tata Electronics by training its workforce on the use of chipmaking equipment and assisting in research and development.
This collaboration is part of a broader wave of semiconductor investments in India, with the Modi administration approving over $15 billion in investments, including a $2.75 billion assembly facility by US memory maker Micron Technology Inc. Additionally, Israel’s Tower Semiconductor Ltd. is exploring a partnership with billionaire Gautam Adani to build a $10 billion fabrication plant in western India.
While China remains a significant market for Tokyo Electron, accounting for nearly 50 per cent of its revenue in the June quarter, sales to China are expected to decrease to between 25 per cent and 30 per cent as the company’s overall sales continue to grow. However, Kawai emphasized that India is not seen as a replacement for the Chinese market but as an additional growth opportunity.
As Tokyo Electron continues to expand its market share against competitors like Applied Materials Inc., the company is focusing on advancing its technologies, including cryogenic etching for high-speed processing of stacked NAND memory and conductor etching for DRAM. Despite some fluctuations in investor sentiment, particularly towards AI, Kawai remains confident about the broader potential for growth in the semiconductor industry, noting that AI is just one aspect of the sector’s future expansion.
Tokyo Electron’s stock has seen a decline since reaching a record high in April, but the company remains focused on the long-term potential of the semiconductor market, which Kawai believes is much larger than the current focus on AI suggests.
