Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>Tokyo Electron's share price dropped 18% on Friday following the announcement of weak Q1 results and a huge downward revision to H2 FY Mar-26 guidance. </li>
<li>Push-Outs and/or cancellations of orders due to the uncertainty caused by President Trump apparently caught managment by surprise. Costs also rising as management ramps up capex and R&amp;D.</li>
<li>Impact of Trump's yet-to-be-announced tariffs on semiconductors is still unknown, but 15% base rate on Japan already a negative. </li>
</ul>


Tokyo Electron's share price dropped 18% on Friday following the announcement of weak Q1 results and a huge downward revision to H2 FY Mar-26 guidance. 
Push-Outs and/or cancellations of orders due to the uncertainty caused by President Trump apparently caught managment by surprise. Costs also rising as management ramps up capex and R&amp;D.
Impact of Trump's yet-to-be-announced tariffs on semiconductors is still unknown, but 15% base rate on Japan already a negative. 


Tokyo Electron (8035 JP): Why the Big Downward Revision?

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<ul><li>In Q1 FY03/26, the company reported revenue of JPY549.6bn, operating profit of JPY144.7bn, and net income of JPY117.8bn.</li><li>The revised FY03/26 forecast projects revenue of JPY2.35tn, operating profit of JPY570.0bn, and net income of JPY444.0bn.</li><li>The company plans aggressive R&D investments, increasing from JPY250.0bn in FY03/25 to JPY295.0bn in FY03/26.</li></ul>

In Q1 FY03/26, the company reported revenue of JPY549.6bn, operating profit of JPY144.7bn, and net income of JPY117.8bn.The revised FY03/26 forecast projects revenue of JPY2.35tn, operating profit of JPY570.0bn, and net income of JPY444.0bn.The company plans aggressive R&D investments, increasing from JPY250.0bn in FY03/25 to JPY295.0bn in FY03/26.

Tokyo Electron (8035 JP): Q1 FY03/26 flash update

<ul><li>In FY03/25, the company achieved revenue of JPY2.43tn, operating profit of JPY697.3bn, and net income of JPY544.1bn.</li><li>For FY03/26, the company projects revenue of JPY2.6tn, operating profit of JPY727.0bn, and net income of JPY566.0bn.</li><li>The company plans to increase R&D expenses to JPY300.0bn in FY03/26, up from JPY250.0bn in FY03/25.</li></ul>

In FY03/25, the company achieved revenue of JPY2.43tn, operating profit of JPY697.3bn, and net income of JPY544.1bn.For FY03/26, the company projects revenue of JPY2.6tn, operating profit of JPY727.0bn, and net income of JPY566.0bn.The company plans to increase R&D expenses to JPY300.0bn in FY03/26, up from JPY250.0bn in FY03/25.

Tokyo Electron (8035 JP): Full-year FY03/25 flash update

<ul>
<li>After dropping by half, Tokyo Electron's share price has bounced. But it is still vulnerable to cutbacks in AI-related investments and tariff-induced recession.</li>
<li>A positive scenario has net profit rising by 8% in FY Mar-26. In a negative scenario, it drops by 25%. We take the positive view.</li>
<li>Innovations in manufacturing point toward a big step up in profit margins by the end of the decade. But watch out for a cyclical downturn between now and then.</li>
</ul>


After dropping by half, Tokyo Electron's share price has bounced. But it is still vulnerable to cutbacks in AI-related investments and tariff-induced recession.
A positive scenario has net profit rising by 8% in FY Mar-26. In a negative scenario, it drops by 25%. We take the positive view.
Innovations in manufacturing point toward a big step up in profit margins by the end of the decade. But watch out for a cyclical downturn between now and then.


Tokyo Electron (8035 JP): Buy if You're Not Afraid of Recession

<ul><li>Cumulative Q3 FY03/25 revenue was JPY1.78tn (+38.4% YoY), with operating profit at JPY513.5bn (+65.1% YoY).</li><li>Full-year forecast for FY03/25 revised: revenue JPY2.40tn, operating profit JPY680.0bn, net income JPY526.0bn.</li><li>New SPE sales forecast: JPY1.83tn, with logic foundry JPY1.17tn, non-volatile memory JPY119.6bn, DRAM JPY545.1bn.</li></ul>

Cumulative Q3 FY03/25 revenue was JPY1.78tn (+38.4% YoY), with operating profit at JPY513.5bn (+65.1% YoY).Full-year forecast for FY03/25 revised: revenue JPY2.40tn, operating profit JPY680.0bn, net income JPY526.0bn.New SPE sales forecast: JPY1.83tn, with logic foundry JPY1.17tn, non-volatile memory JPY119.6bn, DRAM JPY545.1bn.

Tokyo Electron (8035 JP): Q3 FY03/25 flash update

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)