A rare scene in the Japanese stock market!
After 11:30 am this morning, Tokyo Electronics, a blue chip stock in the Japanese stock market, suddenly crashed, with its stock price dropping as much as 8% at its peak, and ultimately closing down 7.46%, with a closing market value of 15.37 trillion yen (approximately 700 billion yuan).
Yesterday, the global chip sector performed quite well, with A-share semiconductor ETFs closing up nearly 3%. From various sources, it appears that semiconductors have also returned to an upward cycle. However, from the pre-market perspective of the US stock market, chip stocks also experienced a general decline, with ASML falling more than 6%, and the guidance for the third quarter did not meet expectations. TSMC fell more than 3%, while Nvidia and AMD fell more than 2%.
So, what exactly happened?
Giant crash
Who would have thought that Tokyo Electronics would crash. Last night, Tokyo Electronics' ADR in the United States increased by 1.65%. This morning, the Japanese stock market opened and the stock also performed well. However, at noon, the stock suddenly crashed, with a sharp drop of nearly 8%. The decline then widened and led to a certain degree of plunge in the Japanese stock market. Subsequently, the decline narrowed slightly, but ultimately closed down 7.46%. According to data from Yingwei Finance, the closing market value of the stock is nearly 700 billion yuan.
So, what exactly happened? Analysts believe that the root cause of the sell-off still comes from the United States.
According to sources cited by Bloomberg, the US government has informed allies that if companies such as Tokyo Electronics and ASML continue to supply advanced chip technology to the outside world, they may face trade restrictions. ASME refused to comment on the report. A spokesperson for Tokyo Electronics also stated that the company cannot comment on "geopolitical issues".
However, there is no unified opinion within the United States. According to sources, Intel, one of the three major chip equipment manufacturers in the United States, emphasized in a recent meeting with American officials that the current trade policy is counterproductive as it will harm American chip manufacturers while failing to prevent the development of chip technology outside the United States.
According to CCTV News, on July 17th, Chinese Foreign Ministry spokesperson Lin Jian presided over a regular press conference. A reporter asked that the United States is considering stricter measures to put pressure on companies from countries such as Japan and the Netherlands to restrict chip related trade. What is China's comment on this?
Lin Jian stated that China has repeatedly expressed a firm stance on the malicious blockade and suppression of China's semiconductor industry by the United States. The United States politicizes, securitizes, and instrumentalizes economic, trade, and technological issues, continuously increases its chip export controls on China, coerces other countries, suppresses China's semiconductor industry, seriously undermines international trade rules, damages global supply chain stability, and is not conducive to any party. China has always been firmly opposed to this.
Lin Jian said that he hopes relevant countries can distinguish right from wrong, resolutely resist coercion, jointly maintain a fair and open international economic and trade order, and truly safeguard their own long-term interests.
The Importance of Tokyo Electronics
So, how important is Tokyo Electronics?
According to data, Tokyo Electronics is currently the fourth largest semiconductor equipment manufacturer in the world, following ASML (with a revenue of approximately 217.178 billion yuan in 2023), Applied Materials (with a revenue of approximately 193.079 billion yuan in 2023), and Panlin. In terms of segmented categories, Tokyo Electronics ranks first in the global market for coating and development, gas chemical etching, diffusion furnaces, and batch deposition equipment, and second in market share for cleaning, plasma etching, metal film deposition, and probe stations. Tokyo Electronics holds a complete monopoly on high directional plasma etching equipment that is compatible with ASML High NA EUV lithography machines, and its probe station is also a key equipment for advanced packaging such as CoWoS and co packaged optical CPO.
Recently, according to media reports, Hiromitsu Kamihara, the president of Tokyo Electric TEL Miyagi subsidiary, stated that the company will invest 1.5 trillion yen from 2025 to 2029 and recruit 10000 new employees. Tokyo Electronics' large-scale investment aims to become the world's largest semiconductor equipment manufacturer, with a total amount of 1.5 trillion yen, which is 1.8 times the investment amount of Tokyo Electronics' last five-year cycle.
At present, the rapid development of generative AI servers and the increasing demand for related logic chips and storage chips have driven wafer fabs to place additional orders with equipment manufacturers such as Tokyo Electronics. The revenue from AI application related equipment has reached 30% of Tokyo Electronics' overall sales.
For Tokyo Electronics, the Chinese market is very important. Its steady performance in the Chinese market is an important component of its global strategy. As the world's factory and technology innovation center, China's demand for chip manufacturing equipment is constantly growing. As a leading Japanese company in technology, Tokyo Electronics has been striving to meet the needs of Chinese customers by providing high-quality chip production equipment and services.
In recent years, with the development strategy of "self-reliance and independent innovation" proposed by the Chinese government, the Chinese chip industry has rapidly risen, and the demand for high-end chip production equipment has shown an explosive growth trend. Despite being influenced by some international factors, the Chinese market remains one of Tokyo Electronics' important growth engines.
On February 9th, Tokyo Electronics released its third quarter financial report for the 2024 fiscal year. According to the information, mainland China continues to be the market with the highest global revenue share, and its revenue share is 3.75 times that of the second ranked Korean market. In the fiscal year 2024, mainland China has been the market with the highest revenue share for Tokyo Electronics for three consecutive quarters, and its share has been increasing quarter by quarter, reaching 46.9% in the third quarter. According to the company's forecast, the operating revenue for China in the fiscal year 2024 (as of March 2025) is expected to reach 700 billion yen, which will continue to remain at the highest level in history.