Investment Thesis
#3 global WFE. ~90% global share coater/developer tracks. FY26 company guidance: sales ¥2,350B, OP margin 24.3%, AI-related equipment ~40% of sales (up from 30%). CY26 WFE market expected record high despite FY26 WFE -5% near-term softness. ¥1.5T R&D committed through March 2029. Zero debt, FCF ¥398B.
Risk
US/Japan export controls: China share declining toward 30% in FY26 (from 42% FY24). BIS rule tightening + Japan photoresist curb risk. TSMC 2nm IP leak case at TEL Taiwan subsidiary — management says limited impact but monitoring. One major logic customer delayed investment to Jan-Mar 2027. New DRAM capex unlikely before 2H 2026.
Monitoring Trigger
FY25 full-year + FY26 outlook May 13, 2026. If AI-related mix tracks 40%+ AND HBM/DRAM equipment orders accelerate in 2H 2026, hold/add. If China share stays above 35% OR logic capex slips further (delayed to FY27), trim.
Key Dates
Update History
FY26 guidance: sales ¥2,350B, OP margin 24.3%, AI equipment ~40% of sales. Near-term WFE -5% in FY26 but CY26 record expected. China share dropping to ~30%. TSMC 2nm IP leak at Taiwan sub — limited impact. One logic customer delayed capex to FY27.
Key Metrics
Business Segments
| Segment | Revenue | Share | Description |
|---|---|---|---|
| Semiconductor Equipment | ¥2,271B | 95% | Coaters (~90% share), etch, CVD, cleaning |
| FPD Equipment | ¥119B | 5% | Display |
Supply Chain Evidence
| Evidence | Customer | Product | Detail |
|---|---|---|---|
| confirmed | TSMC | Coater/developer tracks, etch, cleaning systems | ~90% global coater share — all N3/N2 passes through TEL. 2nm IP leak case at TEL Taiwan sub (2025) — limited impact per Kawamoto.[source](2025-12) |
| confirmed | Samsung Electronics | Logic + DRAM + HBM etching/coating equipment | Major customer; HBM etch demand driver for CY26[source](2025-12) |
| probable | SK Hynix | HBM etch/deposition tools | HBM AI demand driving etch tool growth — key DRAM customer[source](2025-12) |
| probable | Intel Foundry | Intel 18A / 14A process equipment | Intel foundry investment resuming; TEL beneficiary[source](2025-12) |
| probable | Micron Technology | DRAM and HBM equipment | DRAM capex accelerating in 2H 2026 per TEL management[source](2025-12) |
Sources & References
Peer Comparison
| Company | PE | Fwd PE | ROE | Op Margin | FCF |
|---|---|---|---|---|---|
| Kokusai Electric | 37.06 | 30.51 | 16.35% | 18.6% | +¥16B |
| Ibiden | 112 | 62 | 11.5% | 14.5% | -¥100B |
| Tokyo Electron | 40.21 | 30.85 | 23.9% | 24.2% | +¥398B |
| Advantest | 54 | 44 | 49.3% | 44.2% | +¥375B est. |
| SCREEN Holdings | 23.29 | 17.85 | 19.8% | 19.0% | +¥49.4B |
| Shin-Etsu Chemical | 25 | 23.5 | 11.1% | 24.7% | +¥346B |
| DISCO Corp | 55.44 | 43 | N/A | 42.3% | +¥63.7B (OCF ¥133.5B minus capex ¥69.8B; capex doubled FY2025→FY2026) |
| Lasertec | 44.17 | 45.06 | 43.0% | 46.1% | +¥96B |
| Resonac Holdings | 83.53 | ~31.6x | 5.72% | 4.3% | +¥24B |
| Renesas Electronics | Loss | 17.78 | -2.1% GAAP / ~10.5% Non-GAAP | 33.7% Non-GAAP Q1 2026 (H1 guided 31.3%) | +¥364B (confirmed: OCF ¥453B minus capex ¥89B) |
| SUMCO | Loss | N/A | -1.54% | -0.8% | -¥11B |
| Socionext | 36.77 | 22.44 | 6.0% | 7.5% | -¥4B |