Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

<ul>
<li>Steady past performance, soft Q1: TEL doubled revenues and EPS since FY2021 with margins near 30%, but Q1 FY2026 showed a YoY dip as NAND/DRAM digestion hit.</li>
<li>Expansion plans: ¥700 bn capex and ¥1.5 tn R&amp;D by FY2029 will lift capacity ~+80%, aligned with AI logic and HBM-driven WFE growth.</li>
<li>Valuation &amp; growth: At ~18× forward P/E, TEL trades fair vs Lam/Applied but at a steep discount to ASML/KLA, offering upside if recovery unfolds.</li>
</ul>


Steady past performance, soft Q1: TEL doubled revenues and EPS since FY2021 with margins near 30%, but Q1 FY2026 showed a YoY dip as NAND/DRAM digestion hit.
Expansion plans: ¥700 bn capex and ¥1.5 tn R&amp;D by FY2029 will lift capacity ~+80%, aligned with AI logic and HBM-driven WFE growth.
Valuation &amp; growth: At ~18× forward P/E, TEL trades fair vs Lam/Applied but at a steep discount to ASML/KLA, offering upside if recovery unfolds.


Tokyo Electron — Navigating the Cycle, Leveraged to AI/HBM Growth

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.

<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?

Research Coverage of Japanese Listed Companies, Shared Research Inc

Shared Research

Research Coverage of Japanese Listed Companies

Shared Research Inc

Pioneering research coverage of Japanese listed companies. Now customizable and interactive for global institutional investors. Corporate access reimagined.

<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

Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.</li>
<li>The strategy performs well if the Nifty 50 rises <em>and</em> outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.</li>
<li>Leverage increases both the strategy's payoff and probability of success.</li>
</ul>


This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.
The strategy performs well if the Nifty 50 rises and outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.
Leverage increases both the strategy's payoff and probability of success.


EQD | Long Nifty 50 Vs. Short Nikkei 225 - A Relative Value Option Strategy with a Kicker

Asia and Global Semiconductor and Tech Research

Andrew Lu

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.</li>
<li>
<strong>No more Moore's Law</strong>: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.</li>
<li>Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.</li>
</ul>


TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.

No more Moore's Law: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.
Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.


What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?

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)

Tokyo Electron — Navigating the Cycle, Leveraged to AI/HBM Growth

Despite a soft Q1, TEL has doubled revenues and EPS since FY2021 with plans for significant expansion and potential upside in valuation compared...

Rahul Jain