🏭 No semiconductor equipment, no smartphones, no AI, no autonomous driving. Japanese companies control roughly 31% of the global semiconductor manufacturing equipment market— dominating coater/developers at 90%+, wafer cleaning at 60–80%, and semiconductor testing at 58%. As the AI chip boom reshapes the industry, Japan's "behind-the-scenes" champions are stepping into the spotlight.
What Is Semiconductor Manufacturing Equipment? A Multi-Trillion Dollar Industry
Manufacturing a semiconductor chip requires over 1,000 process steps, each demanding specialized ultra-precision equipment. Lithography tools that print circuit patterns, etching machines that carve away unwanted material, deposition systems that build ultra-thin films, cleaning equipment that removes nanoscale contaminants, and testing apparatus that verifies finished chips—all fall under the umbrella of "semiconductor manufacturing equipment."
According to SEMI, the global semiconductor equipment market is projected to reach a record $156 billion by 2027. AI chip demand, the start of 2-nanometer mass production, and massive investment in High Bandwidth Memory (HBM) are fueling this growth.
Japan's Dominant Niches: A Category-by-Category Breakdown
In the overall equipment market, the United States leads at roughly 35%, followed by Japan at approximately 31%. But within specific equipment categories, Japanese companies exercise commanding—sometimes near-monopolistic—control.
Tokyo Electron (TEL) — The Undisputed King of Coater/Developers
Coater/developers apply and develop photoresist, a light-sensitive material essential for forming circuit patterns. Tokyo Electron holds approximately 90–94% of the global market in this category—a virtual monopoly. The company also ranks among the world's top players in etching and deposition equipment, with a broad product portfolio that spans multiple manufacturing steps. Revenue for fiscal year ending March 2026 is projected at approximately ¥2.35 trillion.
SCREEN Holdings — World Leader in Wafer Cleaning
Cleaning steps are estimated to account for 30–40% of the entire semiconductor manufacturing process. SCREEN holds the world's top position in single-wafer cleaning equipment with roughly 34.7% market share, and dominates batch-type cleaning with over 80% share. Its proprietary technology achieves nanoscale particle removal while minimizing wafer damage—a combination that has earned trust from chip manufacturers worldwide.
Advantest — The Quality Gatekeeper of the AI Era
Every semiconductor chip must pass testing before shipment. Advantest commands approximately 58% of the global semiconductor test equipment market—an overwhelming lead. Whether it's GPUs, NAND flash, or HBM, all chips need testing as a final step. As AI chips grow more complex, test times increase, driving ever-greater demand for Advantest's systems. The company revised its fiscal 2025 revenue forecast upward from ¥950 billion to ¥1.07 trillion, and its market capitalization surpassed Tokyo Electron's for the first time in roughly 20 years.
Disco Corporation — The Artisans of "Cut, Grind, and Polish"
Disco holds 70–80% of the global market for dicing saws (which cut wafers into individual chips) and 60–70% for wafer grinders. Originally founded as an abrasive manufacturer, the company's ultra-precision processing technology is seeing growing demand as advanced packaging evolves.
KOKUSAI ELECTRIC — Dominating Batch ALD
In batch-type Atomic Layer Deposition (ALD) equipment, essential for next-generation chip manufacturing, KOKUSAI ELECTRIC holds approximately 70% global share. Together with Tokyo Electron, it forms a duopoly that underpins manufacturing at the 2-nanometer node and beyond.
Why Japanese Companies Excel: Three Structural Advantages
First, a culture of "suri-awase" (collaborative fine-tuning) that produces unmatched precision. Cleaning equipment that requires microscopic control of ultra-pure water temperature and chemical concentrations, or coating technology demanding nanometer-level accuracy—these cannot be developed without decades of accumulated shop-floor know-how. This tacit knowledge base makes Japanese technology extremely difficult for competitors to replicate.
Second, deep, long-term customer relationships. Once a chip manufacturer integrates equipment into their production line, they optimize processes around that specific equipment's characteristics. This "lock-in effect" creates significant barriers to entry, sustaining Japanese companies' market positions. Meticulous after-sales support further differentiates them from Western competitors.
Third, a vertically integrated industrial ecosystem with world-class materials suppliers. Shin-Etsu Chemical and SUMCO in silicon wafers, Tokyo Ohka Kogyo and JSR in photoresists, JX Metals in sputtering targets—Japan hosts a cluster of globally dominant materials companies. The tight coordination between equipment and materials manufacturers strengthens the entire Japanese semiconductor supply chain.
The Inconvenient Truth: Japan's "Strong Niche" Dilemma
However, the picture is not entirely rosy. Most equipment categories where Japanese companies lead have market sizes capping at roughly $6 billion. In contrast, categories exceeding $10 billion—lithography, etching, and CVD deposition—are dominated by ASML, Applied Materials, and Lam Research.
In lithography, where Nikon and Canon once held combined share exceeding 70%, ASML's EUV (Extreme Ultraviolet) technology has shifted the landscape dramatically. ASML now controls over 90% of the lithography market, while Japanese companies hold less than 10%.
Furthermore, Japan's semiconductor device consumption market continues to decline. In 2025, Japan was the only major market globally to record year-on-year decline in semiconductor sales, with its share falling to just 5.7%. The paradox of strong equipment makers coexisting with a shrinking overall semiconductor presence is a reality Japan must confront.
Government Mega-Investments and the "Made in Japan" Chip Revival
The Japanese government invested approximately ¥4 trillion in the semiconductor industry over three fiscal years from 2021 to 2023—proportionally more than the United States or Western European nations relative to GDP. This includes support for TSMC's Kumamoto fab (JASM), funding for Rapidus Corporation's 2-nanometer chip development, and an additional ¥200 billion investment in Rapidus announced for fiscal 2025.
In Kumamoto, TSMC's arrival has triggered a structural economic transformation, attracting semiconductor-related businesses and creating significant employment. In Chitose, Hokkaido, Rapidus has activated its pilot line and successfully verified operation of 2-nanometer-class prototype transistors.
These developments create tailwinds for equipment makers. More domestic cutting-edge fabs mean faster development and verification cycles, and deeper collaboration with customers.
The AI Semiconductor Boom: A Historic Opportunity
The start of 2-nanometer mass production in late 2025, 1.6-nanometer production beginning in late 2026, and the emergence of HBM4—as semiconductor miniaturization and performance acceleration intensify, equipment manufacturers face unprecedented business opportunities.
The Semiconductor Equipment Association of Japan (SEAJ) forecasts that Japanese semiconductor equipment sales will reach ¥5.35 trillion in fiscal 2026. How much additional market share Japanese equipment makers can capture as AI-related investment scales up is a key question for the industry.
That said, export restrictions stemming from US-China tensions cannot be ignored. China is one of Japan's largest equipment markets, and tighter restrictions could impact short-term revenues. Balancing geopolitical risk with business opportunity will shape corporate strategies going forward.
Conclusion: From Supporting Cast to Center Stage
Japan lost significant ground in semiconductor chip manufacturing itself, but in "the machines that make chips," it remains the world's second-largest force. In coater/developers, cleaning equipment, test systems, and dicing saws, global chip manufacturing simply cannot function without Japanese companies.
The AI era could represent a historic inflection point for Japanese equipment makers. Armed with precision manufacturing—a quiet but formidable strength—the world is watching how far Japanese companies can go in the global market.
Does your country have semiconductor equipment companies or national projects? What are the strengths and challenges of your nation's semiconductor industry? We'd love to hear your perspective!
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Reactions in Japan
The spotlight is always on the big names, but mid-tier companies like ours also hold share in specific processes. There are still many craftsman-minded manufacturers in Japan competing on component-level precision. We deserve more recognition.
The real strength of Japanese equipment isn't just specs—it's response speed on the factory floor. Where overseas makers take a week for repair parts, Japanese makers sometimes arrive next day. This gap doesn't show in numbers but it's huge.
Honestly, Japan's loss in EUV lithography still stings. Nikon and Canon had the technology but were outmaneuvered by ASML in strategy and speed. I hope other equipment makers don't repeat the same mistake.
My senior labmate got an offer from Tokyo Electron and when I heard the salary, my jaw dropped. I didn't know manufacturers paid this much. Semiconductor equipment is THE field for science grads right now. Torn between staying in academia...
Everyone talks about market share but are you forgetting export controls? Every time restrictions on China tighten, they accelerate domestic production. The growth speed of Chinese equipment makers like NAURA and AMEC is a real threat. Five years from now could be scary.
Advantest's market cap surpassing Tokyo Electron is incredibly symbolic. Testing seems boring but gets more critical as AI chips grow complex. It's a back-end process revival.
Most people don't know SCREEN is a Kyoto company. Kyoto isn't just Nintendo—we've got a world champion in semiconductor equipment too. Something to be proud of.
Working at a foreign fab, Japanese equipment reliability is well-regarded internally. But honestly, there are complaints about outdated UIs and software. Best-in-class hardware let down by software—a classic Japan pattern...
Sure, share is high where we lead. But the real issue is those markets are small. The big-money segments are all captured by US and European firms. Focus and concentration is fine, but concentrating on small markets is a questionable strategy.
Since TSMC arrived, Kumamoto land prices have skyrocketed and locals aren't all happy. Traffic congestion and water shortages are getting worse. If you're going to talk about semiconductor industry benefits, report the infrastructure downsides too.
Equipment makers' boom is rippling through trading companies—everyone's competing for semiconductor deals. But US-China regulations have made compliance checks insanely complex for which equipment can go where. Legal is busier than sales at this point.
Love Disco's story of going from an abrasive maker to 80% global share. Relentlessly refining an unglamorous technology to become world #1—isn't that the ideal of Japanese manufacturing? And average salary of ¥16.72 million is insane.
Living in Taiwan, you really feel the presence of Japanese equipment makers. TEL and SCREEN machines are standard in TSMC fabs. But it's true that Korea's SEMES is catching up in cleaning equipment.
Semiconductor equipment patent filings have surged in recent years. Japanese companies stand out especially in cleaning and inspection. Whether they can build patent moats will be key to maintaining market share.
Semiconductor equipment doesn't click for most people, but basically Japan has tons of companies making the machines that make what's inside your iPhone. Understanding this 'machines that make machines' industry changes how you see Japan's economy.
Korea's SEMES is growing fast in cleaning equipment because of its relationship with Samsung and SK Hynix. But honestly, it still can't match SCREEN's precision. It'll take at least 5 years for Korean equipment makers to catch up with Japan.
From a US perspective, Applied Materials and Lam Research take Japanese makers seriously as rivals. Competition with Tokyo Electron in etching is fierce. But in cleaning and testing, Japan is so dominant that entering those markets isn't realistic.
For China, US-Japan export restrictions are making it harder to buy advanced equipment. That's why we're going all-in on domestic development. NAURA and AMEC will get pretty far by 2030. Ironically, restrictions are accelerating China's self-sufficiency.
Working at Fraunhofer, ASML's success is Europe's pride but also an exceptional case. In the equipment industry overall, Europe's presence is limited. Japan's breadth of coverage across categories is honestly enviable.
India is trying to attract semiconductor manufacturing domestically, but equipment procurement is a bottleneck. We lack the track record for direct deals with Japanese makers. Watching closely how much Japanese equipment goes into Tata Electronics' new fab plans.
After 20 years as a semiconductor analyst, Japan's weakness is marketing and IR. The technology is superb but communication to global investors is poor. Advantest's market cap overtaking TEL partly reflects improved investor relations.
I'm an engineer at a TSMC fab in Taiwan. It's no exaggeration to say half our equipment is Japanese. TEL's coater/developers are exceptionally stable, and support response is fast when issues occur. But price negotiations are always tough.
From Brazil, semiconductor equipment sounds like another world. But knowing that what's inside our phones and cars is made by Japanese machines makes it feel surprisingly close. Hope the semiconductor supply chain benefits reach South America too.
Working at a Swedish semiconductor startup, equipment selection is always tricky. Japanese gear has top performance and reliability but high upfront costs. If they offered more flexible sales models for startups, they could expand share even more.
As a Korean, I hate to admit it, but Advantest is unrivaled in testing. Especially for HBM testing. Even though Korean makers lead the world in memory, quality verification relies on Japanese equipment. That's reality.
I work at an Israeli chip design company. All manufacturing is outsourced to foundries, and we rarely think about the equipment used. But our chips wouldn't exist without Japanese equipment makers. They deserve more respect.
Vietnam is growing as a back-end hub, but front-end equipment manufacturing is a distant dream. Japan's equipment expertise was built over decades. Southeast Asia can't catch up overnight.
Australia has nothing to do with chip manufacturing, but as a resource nation I'll say this: as miniaturization advances, purity requirements for rare earths and gases increase. Japan is strong in purification too. Look at the whole surrounding technology ecosystem, not just equipment.