Computer chip makers in Japan and the companies that produce machines to build chips have been reporting earnings for the latest quarter, and the results were better than most people expected. The good results are because of one main reason: artificial intelligence technology that requires lots of computer chips if it is to work properly. Big technology companies from different parts of the world are building massive data centres filled with computers, and all those computers need chips.
More than three-quarters of Japanese chip companies beat the predictions that financial analysts had made. Across the entire group of technology companies, profits went up 35 compared to last year. Advantest Corporation was among the largest of those helping push those profit numbers higher, according to data that Bloomberg collected.
Chip and Equipment Manufacturers Are Faring Well
Tokyo Electron Limited makes the equipment used by other companies to make chips. They raised their prediction for the amount of operating profit they expect to make for the whole year. Analysts who follow this company believe the strong demand for chip production equipment will continue through next year because the chipmakers are spending high sums on new factories and equipment.
The chips are becoming increasingly complicated to build, which means companies need better equipment in order to make them. According to two analysts from Bloomberg Intelligence named Masahiro Wakasugi and Takumi Okano, this increased difficulty will raise demand for Tokyo Electron’s equipment.
Advantest provides equipment to test chips after they are made. They revised their operating profit to 374 billion yen. Advantest supplies testing equipment to Nvidia Corporation and its share of the global memory chip testing market rose 7 percentage points to reach 63 per cent.
Artificial Intelligence Transforming the Chip Business
Demand for chips related to artificial intelligence is extending beyond just the specialised high-bandwidth memory chips. Regular DRAM and NAND chips see more demand because of AI technology. This means more business for the firms making materials and equipment for the production of these types of chips. Demand for AI graphics processing units remains strong and could get even stronger going into 2026.
Toshiki Kawai is the chief executive of Tokyo Electron, and he said in an earnings call that “the era of AI has arrived.” He said strong demand for AI servers and the chip innovation needed for those servers will be “powerful drivers of continued, dramatic growth of investment for leading-edge semiconductors.” He expects double-digit growth to continue beyond next year.
But the chip industry is getting a boost of cash from the Japanese government, and that’s giving people more reason to be optimistic about the sector. Japan has set aside around 5.7 trillion yen since 2021 to help revive its chip industry, according to the Ministry of Economy, Trade and Industry.
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