Tokyo Electron cuts outlook on U.S. chip restrictions and memory meltdown

(Bloomberg) – Leading chip equipment supplier Tokyo Electron Ltd. cut its full-year outlook after memory makers cut spending and the United States tightened restrictions on edge chip exports to China.

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The Tokyo-based company now reports annual operating profit of 546 billion yen ($3.7 billion), down 24% from its previous forecast, despite quarterly revenue growth worldwide. His caution echoes pessimism among U.S. rivals such as Applied Materials Inc. and Lam Research Corp.

Tokyo Electron will 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, said at a press conference on Thursday.

“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. , with waiting times of several months for the delivery of the equipment.

With a client list that includes Semiconductor Manufacturing International Corp. and Yangtze Memory Technologies Co., Tokyo Electron does about a quarter of its revenue in China, though that number includes foreign companies that have factories there.

Japan’s exports of chip gear to China have hit record highs so far this year, up more than 20% in the September quarter from a year earlier.

“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 $550 billion globally interconnected industry.

While the move dealt a blow to China’s chip industry, it imposed tough restrictions on US semiconductor equipment companies that will cost them billions of dollars in revenue. This was in addition to spending cuts announced by memory makers from SK Hynix Inc. to Micron Technology Inc.

Washington has signaled to its allies its desire that they follow suit on export controls to restrict China’s access to critical chip technologies. US officials have said that if allies do not align with US efforts, their rules will lose their effectiveness over time.

–With help from Debby Wu, James Mayger and Ian King.

(Adds comment from company press conference to fourth paragraph; earlier version corrected SMIC name in fifth paragraph)

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