Japan's Semiconductor Manufacturing Equipment Sector Reaches Historic Milestone in FY2026
The Semiconductor Equipment Association of Japan (SEAJ) announced on January 15, 2025, that sales of Japanese-made semiconductor manufacturing equipment are forecast to reach ¥5.5004 trillion (approximately $38 billion) in fiscal year 2026, representing a 12% year-over-year increase. This marks the first time in industry history that sales will exceed the ¥5 trillion threshold, signaling a new era of growth for Japan's semiconductor equipment sector.
SEAJ Chairman Toshiki Kawai, who also serves as President of Tokyo Electron, expressed strong confidence in the industry's future, stating at a press conference: "In the front-end equipment (WFE) market, the proportion of advanced products is increasing. There is a high possibility that the global market share of Japanese-made equipment will grow."
AI Revolution Drives Semiconductor Investment Surge
The primary catalyst behind this historic achievement is the explosive growth in demand for AI-related semiconductors. The widespread adoption of generative AI, exemplified by ChatGPT, has accelerated investment in advanced semiconductors for data centers worldwide.
Key growth areas include:
- Advanced Logic Semiconductors: Investment in 2-nanometer generation semiconductors used for manufacturing AI server GPUs and AI chips is expected to accelerate from FY2026
- HBM (High Bandwidth Memory): This high-speed memory essential for AI processing is seeing capacity expansion from major DRAM manufacturers
- Advanced Packaging Technologies: Demand for technologies that integrate multiple chips is surging
Chairman Kawai emphasized, "We have now entered the AI era. Looking further ahead, ICT industries will continue to grow through quantum computing, robotics applications, and more," highlighting the long-term growth trajectory for the semiconductor equipment industry.
Three Consecutive Years of Growth, Maintaining ¥5 Trillion Level Through FY2027
According to SEAJ's forecast, sales of Japanese-made semiconductor manufacturing equipment are expected to exceed the previous year for three consecutive years.
| Fiscal Year | Sales Forecast | YoY Change |
|---|---|---|
| FY2025 | ¥4.9111 trillion | +3% |
| FY2026 | ¥5.5004 trillion | +12% |
| FY2027 | ¥5.6104 trillion | +2% |
With AI-related demand expected to remain elevated in FY2027, sales are projected to stay above the ¥5 trillion mark for a second consecutive year.
Japan's Strengths: Dominant Market Share in Cleaning and Inspection Equipment
Japanese companies hold world-leading positions in specific segments of the semiconductor manufacturing equipment market. In areas such as single-wafer cleaning equipment, critical dimension scanning electron microscopes (CD-SEM), and batch-type cleaning equipment, Japanese companies command 60-80% of the global market.
Six Japanese companies rank among the world's top 15 semiconductor equipment manufacturers, with Tokyo Electron holding the fourth-largest sales globally. Other Japanese companies in the top rankings include Advantest, SCREEN, Disco, Daifuku, and Hitachi High-Tech.
In 2024, as semiconductor capital expenditure in China expanded beyond expectations, Japanese equipment manufacturers outperformed the market average. Tokyo Electron grew 27%, Advantest 37%, and SCREEN 33%, demonstrating significant business expansion.
Domestic Market Also Growing: Rapidus and TSMC Investments Provide Tailwinds
The Japanese domestic semiconductor manufacturing equipment market is also projected for steady growth, expected to reach ¥1.5185 trillion in FY2027, up 10% from the previous year. This growth is driven by anticipated investments from major foundries and production investments in 2-nanometer process technology.
The Japanese government has strengthened its support for the semiconductor industry, investing approximately ¥4 trillion over three years from FY2021 to FY2023. This includes support for Rapidus Corporation, which aims to develop next-generation domestic semiconductor production, and Taiwan's TSMC, which has established operations in Kumamoto Prefecture.
Global Market Trends: Heading Toward a $1 Trillion Market by 2030
According to the World Semiconductor Trade Statistics (WSTS), the global semiconductor market is forecast to reach a record $772.2 billion in 2025, up 22.5% year-over-year. The market is projected to reach $1 trillion by 2030, driving corresponding medium to long-term growth in the semiconductor equipment market.
SEMI, the global industry association for electronics manufacturing and design supply chain, projects that worldwide semiconductor manufacturing equipment sales will reach a record $156 billion in 2027. This growth will be driven by AI-related investments, with continuing demand for advanced logic, memory, and advanced packaging technologies.
Challenges and Future Outlook: Innovation and Global Competition
Despite these positive trends, challenges remain for Japan's semiconductor equipment industry. In the lithography equipment segment, the Netherlands-based ASML holds an overwhelming market share in EUV (extreme ultraviolet) lithography equipment, while Japanese companies Nikon and Canon face significant competitive pressure.
However, the expanding demand for advanced semiconductors driven by AI adoption represents a major opportunity for Japanese companies. In particular, there are numerous areas where Japanese companies can leverage their strengths in miniaturization technologies for 2-nanometer and beyond, as well as 3D packaging technologies such as chiplets.
Japan's semiconductor equipment industry is expected to enhance its global presence through continued investment in technological innovation and close collaboration with semiconductor manufacturer customers.
Japan's semiconductor equipment industry is on the verge of achieving a historic ¥5 trillion market milestone, entering a new growth phase with the dawn of the AI era.
What is the situation for the semiconductor industry and equipment manufacturers in your country? We'd love to hear about trends among semiconductor-related companies and government support policies in your region!
References
- https://news.yahoo.co.jp/articles/46d5c97401933ca96c64d11c6f7388f1f6630f61
- https://www.nikkei.com/article/DGXZQOUC151Z40V10C26A1000000/
- https://news.mynavi.jp/techplus/article/20260116-3983170/
- https://www.seaj.or.jp/
- https://www.trade.gov/country-commercial-guides/japan-semiconductors
- https://www.semi.org/en/semi-press-release/global-semiconductor-equipment-sales-projected-to-reach-a-record-of-156-billion-dollars-in-2027-semi-reports
Reactions in Japan
It's amazing that semiconductor equipment will surpass ¥5 trillion. Glad I invested in Tokyo Electron and Advantest. The AI rally seems to have more room to run.
Happy to see Japanese equipment makers doing well, but concerned about losing completely to ASML in lithography. Hope to see development of technologies that can compete with EUV.
Reaching ¥5 trillion is positive news, but some of it is inflated by the weak yen. We need to soberly assess how much actual competitiveness has improved.
Good news that Japan's semiconductor equipment industry is benefiting from the AI era. However, Japan is lagging in AI development itself, so catching up there is also necessary.
I thought semiconductor stocks were already expensive, but it looks like they still have room to grow. Need to reconsider Lasertec and Disco too.
The semiconductor equipment industry is popular with job seekers now. Good salaries and future prospects - I'm envious. It wasn't this exciting when I was job hunting...
The impact of export restrictions to China may emerge later, so I can't celebrate unconditionally. Analysis considering geopolitical risks is needed.
Kumamoto's economy has changed since TSMC arrived. More semiconductor-related companies are coming in and job openings have increased - grateful for that. Hope Japan's industry as a whole gets revitalized.
In the 80s, Japan had over 50% of the global semiconductor market. It's reassuring that we still have a presence in manufacturing equipment. I wonder if we can shine again.
Increased demand for semiconductor equipment is making parts procurement difficult. It's a good market, but we need to watch for supply chain constraints.
SEAJ forecasts are generally reliable. If they expect to maintain over ¥5 trillion through FY2027, semiconductor stocks look promising in the medium term.
There were tough times when I was working, but I'm truly happy to see the younger generation doing well. Japan's technological capabilities are still going strong.
Semiconductor manufacturing uses a lot of water and electricity. Industry growth is good, but environmental impact should be discussed more.
Curious about which specific areas will grow when they talk about Japanese equipment expanding market share. Hope we can win in more areas beyond cleaning equipment.
Don't just focus on big companies - pay attention to semiconductor-related startups too. There are quite a few ventures with interesting technologies in Japan.
I'm worried about what happens if the AI bubble bursts. Semiconductors have strong business cycles, so long-term investors need to be prepared.
Impressive that Japan's semiconductor equipment industry will reach ¥5 trillion. The AI boom is driving huge semiconductor demand in the US too, but we rely heavily on Japanese technology for manufacturing equipment. Japanese cleaning equipment in particular is dominant.
From a German perspective, I'm envious of Japan's strength in semiconductor equipment. Europe has ASML, but other equipment makers aren't very prominent. I think we need an environment where diverse companies can grow like in Japan.
From Korea's perspective, Samsung and SK Hynix are major customers of Japanese equipment makers. As we accelerate HBM investment, it's natural that demand for Japanese equipment grows. The competitive yet cooperative relationship continues.
Taiwan's TSMC also heavily depends on Japanese manufacturing equipment. Japanese companies should benefit greatly as 2nm investment accelerates. However, global supply chain restructuring is also progressing due to China export restrictions.
The UK has limited presence in semiconductor manufacturing, so we're watching Japan's success with interest. Few countries can show presence in manufacturing equipment in the AI era. Japan is one of those few.
It's true that the Chinese market is boosting Japanese equipment sales, but the situation could change if US export restrictions strengthen. China is also rushing to develop domestic equipment, and we need to watch the long-term competitive landscape.
As India tries to enter semiconductor manufacturing, cooperation with Japanese equipment makers is essential. Tata is building a fab, and much of the equipment will likely be sourced from Japan.
As a Dutch person, while ASML dominates lithography equipment, I think Japan's strength in other equipment areas represents healthy competition. The semiconductor ecosystem is better with diversity than single-country dominance.
Mexico is also working to attract semiconductor-related industries. If Japanese equipment makers are this strong, I hope for Japanese company expansion into Mexico in the future. It could contribute to strengthening the North American supply chain.
Poland is also trying to attract investment as part of EU semiconductor initiatives. Japan's equipment industry success is a good reference. It clearly shows the importance of combining technological capability with government support.
Australia isn't involved in semiconductor manufacturing, but as AI users, supply chain stability matters to us. Japan's strong equipment industry is good news for the entire Asia-Pacific region.
Sweden has semiconductor-related companies, but we're far behind Japan in manufacturing equipment. Japan's advantage in cleaning technology in particular is the result of years of accumulation. It can't be caught up overnight.
The UAE has been strengthening technology investments recently, but it takes time to develop advanced industries like semiconductor manufacturing equipment. We shouldn't forget that Japan's success is the result of decades of effort.
Ireland has factories of major chip makers like Intel. Much of the equipment used there is Japanese. The ¥5 trillion figure is proof that Japanese manufacturing is still competitive globally.
Brazil has almost no semiconductor industry, but we benefit from AI technology. I think it should be better known that Japan's manufacturing equipment industry is behind it all.