Declining Semiconductor Demand... Rising Outlook for Deteriorating Performance of Japanese Manufacturing Equipment Companies

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As semiconductor demand declines, concerns are growing over the worsening performance of Japanese semiconductor manufacturing equipment companies, reported Nihon Keizai Shimbun on the 16th.

Nihon Keizai cited QuickFactSet data, stating that the net profit forecasts for four Japanese semiconductor manufacturing equipment companies?Tokyo Electron, Screen Holdings, Advantest, and Disco?for the 2022 fiscal year (April 2022 to March 2023) and the 2023 fiscal year (April 2023 to March 2024) have been revised downward this month compared to the initial forecasts made in June.

For the 2022 fiscal year, the net profit growth rate was reduced by 2 percentage points from 23% in June to 21% this month. For the 2023 fiscal year, the forecast was adjusted from an expected 4% increase in net profit to a 7% decrease, indicating a shift to a loss. Accordingly, the combined net profit of the four Japanese semiconductor manufacturing equipment companies is expected to be 768.9 billion yen (approximately 7.5 trillion KRW) for the 2022 fiscal year and 715.4 billion yen for the 2023 fiscal year.

Nihon Keizai explained that this poor earnings outlook is due to a decline in semiconductor demand. There are views that demand for semiconductors used in consumer smartphones and PCs is decreasing, followed by a reduction in demand for enterprise semiconductors. Additionally, global semiconductor companies such as Intel, Micron, and SK Hynix are continuing to cut back on capital expenditures.

Looking at the 2023 fiscal year net profit forecasts by company, Tokyo Electron showed the largest decrease rate of 14% compared to June, followed by Screen Holdings at 11%, Disco at 6%, and Advantest at 3%. Earlier this month, Tokyo Electron’s President Toshiki Kawai commented on the semiconductor market outlook, saying, "It will remain a localized movement and will not become a significant (downward) trough," but the actual earnings forecasts suggest a considerable impact.

Nihon Keizai stated, "The focus is on when earnings will recover," adding, "Looking at the quarterly net profit forecasts for Japanese semiconductor equipment companies, the bottom is expected to occur in either April to June 2023 or July to September 2023." Nihon Keizai also noted that if the global economic recession continues, the poor earnings performance could be prolonged.