AI Boom Pushes Japan's Chip Equipment Sales to Record Highs

Japan's semiconductor equipment industry just got a lot more bullish about AI. The Semiconductor Equipment Association of Japan (SEAJ) has raised its sales forecast for Japanese-made chipmaking equipment to 6.5502 trillion yen (roughly $44.5 billion) for fiscal 2026, up 26% from the prior year and nearly 1.05 trillion yen higher than the association predicted just six months earlier.

The revision, published in July, is one of the sharpest upward swings SEAJ has issued in recent memory. In January, the group had projected fiscal 2026 sales of only 5.5004 trillion yen. The gap between the two forecasts reflects how quickly demand tied to artificial intelligence infrastructure — data centers, GPUs, and the advanced chips that power them — has outpaced expectations in the first half of the year.

For Taiwan, which sits at the center of the world's advanced-logic chip production through foundries like TSMC, the forecast is a signal of how deep and how fast AI-driven capital spending is flowing through the semiconductor supply chain that Taiwanese manufacturers depend on for equipment and materials.

SEAJ's own numbers tell a story of accelerating momentum. Fiscal 2025 sales came in at 5.1986 trillion yen, up 9% and the first time the industry topped the 5 trillion yen mark. The association now expects growth to continue well past this year, projecting 7.4017 trillion yen in fiscal 2027 and 7.7718 trillion yen in fiscal 2028.

The driver, according to SEAJ, is a combination of advanced logic chip production and a memory upgrade cycle centered on high-bandwidth memory, or HBM. HBM is a premium class of DRAM — the memory chips used in computers, servers, and phones to handle data on the fly — built by stacking multiple layers of silicon with advanced packaging to move data far faster than conventional memory. AI servers depend on that speed to keep GPUs and AI accelerators fed with data, which has made HBM one of the most sought-after components in the current chip cycle.

That demand has spilled over into conventional DRAM as well. SEAJ said that from the second half of fiscal 2025, demand for standard DRAM used in AI servers — separate from HBM — also picked up sharply, tightening supply and pushing prices higher. As HBM technology advances, manufacturers are moving from 12-layer and 16-layer stacks toward 20 layers, a shift SEAJ expects will keep the memory market tight for some time. The association also pointed to renewed investment in NAND flash memory, driven by demand for solid-state drives used in AI servers.

Not every company in Japan's chip equipment industry stands to benefit equally. Manufacturers focused on advanced, leading-edge process equipment are positioned to outgrow the broader market, since AI, advanced logic, and DRAM investment is concentrated at the cutting edge.

Trade publication Nikkan Kogyo Shimbun reported that Tokyo Electron expects its front-end process equipment business to grow more than 20% in fiscal 2026, while SCREEN Holdings is forecasting 15% to 20% growth and KOKUSAI ELECTRIC expects roughly 15%. Tokyo Electron's own guidance points to April-to-September 2026 revenue of 1.57 trillion yen, up 33.1% year-on-year, with net profit climbing 35.7% to 328 billion yen.

Companies more exposed to mature-process technology face a less certain path. Canon and Nikon, both of which run semiconductor equipment businesses alongside their broader imaging and optics operations, are seeing more modest trajectories — Nikon's semiconductor equipment revenue fell 5.3% in the year ended March 2026, with the company posting a net loss of 8.6 billion yen for the period, though it is guiding toward a return to profitability in fiscal 2027.

Back-end and testing equipment is proving to be another strong pocket of growth. Advantest, which makes chip testing systems, reported revenue above 1 trillion yen for the first time in its fiscal year ended March 2026 — a 44.7% jump — as rising chip complexity drives longer test times and demand for more precise testing equipment. The company has said it is accelerating plans to reach production of 5,000 SoC testers annually and is targeting 10,000 units a year by late 2028 or 2029.

Japanese equipment makers expect China's overall share of global chip equipment purchases to decline as the current growth cycle shifts toward AI-related investment concentrated in the U.S., Taiwan, and South Korea. Even so, several companies say they still see business coming from Chinese customers.

Chinese NAND flash producer YMTC is reportedly planning new fabrication capacity in Wuhan, and KOKUSAI ELECTRIC president Kazunori Tsukada said the company continues to hear about new fab plans from Chinese customers, which he described as a potential source of upside for future orders.

To keep pace with demand, Japan's largest equipment makers are expanding physical capacity rather than waiting for the cycle to plateau. Tokyo Electron is building new facilities in Miyagi, Iwate, and Kumamoto prefectures, with a new production building in Miyagi scheduled to open in the summer of 2027. KOKUSAI ELECTRIC said in April it had acquired about 43,000 square meters of land next to its existing site in Toyama Prefecture, which it plans to use for manufacturing, research, and possibly logistics operations.

SEAJ's headline figures cover total global sales by Japanese-headquartered equipment companies, including through their overseas subsidiaries, rather than demand inside Japan alone. Measured on a domestic basis, the association projects Japan-market sales of 1.5835 trillion yen in fiscal 2026, rising to 1.821 trillion yen in fiscal 2027 and crossing 2 trillion yen for the first time in fiscal 2028, at 2.2763 trillion yen.

Taken together, the numbers point to a broader transition in Japan's semiconductor equipment industry — away from a cycle historically driven by mature-process technology and Chinese capital spending, and toward one anchored in AI infrastructure, HBM, advanced logic, and high-end testing. Uncertainty remains around mature-node demand and some legacy business lines, but the scale of SEAJ's upward revision, paired with aggressive capacity expansion across the sector, suggests the current growth phase has more structural staying power than prior upcycles tied largely to China.

For chip-dependent economies like Taiwan, the implications extend beyond Japan's equipment makers. Tighter global capacity for advanced logic and memory production — and the accompanying equipment investment boom — reinforces how central AI infrastructure spending has become to the entire semiconductor supply chain, from raw equipment orders in Japan to advanced chip fabrication in Taiwan.

1. Semiconductor Equipment Association of Japan (SEAJ), Semiconductor and FPD Manufacturing Equipment Demand Forecast, July 2026.
2. Semiconductor Equipment Association of Japan (SEAJ), Semiconductor and FPD Manufacturing Equipment Demand Forecast, January 2026.
3. Newswitch / Nikkan Kogyo Shimbun, "Semiconductor Equipment Sales Set to Surge: What Nine Makers Are Projecting for FY March 2027".
4. Newswitch / Nikkan Kogyo Shimbun, "Semiconductor Equipment Sales Revised Up by More Than 1 Trillion Yen as DRAM Investment Surges", via Yahoo! News Japan.
（Related： Behind Every AI Chip, a Taiwan Supplier Quietly Cashes In ｜ Latest ）

​Original Article in Chinese​