In late July 2026, Japan's semiconductor equipment giants successively released their Q2 earnings. Against the backdrop of a sustained global AI investment boom, leading companies such as Tokyo Electron and Disco Corporation reported record order data, signaling that the Asia-Pacific semiconductor equipment industry is entering a new upward cycle.

Order Surge: AI Chip Drives Equipment Demand Explosion

According to earnings reports, Tokyo Electron's order value in Q2 2026 (ending June 30) reached a record ¥680 billion, up 45% YoY and 18% QoQ. Orders for etching and thin-film deposition equipment for advanced processes grew the strongest. CEO Toshiki Kawai stated at the earnings briefing, "Demand for AI accelerator chips at 3nm and below far exceeds expectations, and our high-precision equipment is almost in short supply."

Another dicing and grinding equipment giant, Disco Corporation, also recorded its best quarter ever: revenue of ¥120 billion, surging 62% YoY; net profit of ¥35 billion, up 91% YoY. The company noted that AI chip demand for advanced packaging (such as 2.5D/3D packaging) is the main growth engine. In particular, orders for wafer dicing and bonding equipment for Chiplet integration grew over 80% YoY.

Additionally, test equipment supplier Advantest also benefited. Its SoC test equipment orders grew 55% YoY, mainly from AI chip testing demand from NVIDIA, AMD, etc. Advantest CEO Eiichi Yoshida emphasized during the earnings call, "The complexity of AI chips requires longer test times, directly increasing the demand density for test equipment."

Semiconductor Cycle from Equipment Perspective: Asia-Pacific Leads Globally

According to data from the Semiconductor Equipment Association of Japan (SEAJ), Japan's semiconductor equipment sales (including exports) in Q2 2026 grew 38% YoY to ¥1.2 trillion, marking four consecutive quarters of growth. The SEAJ chairman stated, "The capex boom for AI servers is spreading from the US to Asia, with wafer fabs in South Korea, Taiwan, and Mainland China actively expanding production."

By region, the share of equipment exports to China fell to 25% (from 32% a year earlier), while shares to South Korea and Taiwan rose to 45%. This reflects more aggressive advanced process investments by South Korea (Samsung, SK Hynix) and Taiwan (TSMC) amid global supply chain restructuring. For example, TSMC raised its 2026 capex budget to $40-42 billion, with 70% allocated to 3nm, 2nm processes, and advanced packaging.

Evolution of Industry Chain Landscape: Technology Moat of Japanese Equipment Makers

Currently, Japan holds about a 30% share of the global semiconductor equipment market, second only to the US. It has absolute advantages in coating/developing, cleaning, dicing, and scribing. Tokyo Electron holds over 80% global market share in coating/developing equipment, and Disco holds nearly 70% in wafer dicing equipment.

As AI chips demand higher yield and precision, Japanese equipment makers' high-end products become harder to replace. For instance, Tokyo Electron's newly launched next-generation atomic layer deposition (ALD) equipment can meet thin-film thickness control requirements for sub-2nm processes, currently only produced by Japanese and US companies. Analysts believe the technology barriers of Japanese equipment makers will be difficult to break in the next 3-5 years.

Industry Interpretation: Future Growth Drivers and Risks Coexist

Despite strong short-term orders, there is divergence within the industry regarding growth sustainability after 2027. Gartner semiconductor analyst Wang Jing noted, "The capex cycle for AI chips typically leads equipment orders by 6-9 months. If AI chip supply-demand balances in 2027, equipment order growth may slow." Additionally, geopolitical risks persist: US export controls on China may tighten further, restricting equipment flows to China.

However, multiple brokerages are bullish on the long-term prospects of Japanese equipment makers. Morgan Stanley raised its target price for Tokyo Electron to ¥48,000 in its latest report, citing reasons: AI transitioning from training to inference, edge AI device demand boosting packaging and test equipment; and continued expansion of memory chips (HBM). The report stated, "Japanese equipment makers are among the most certain links in the AI hardware supply chain."

Conclusion

In Q2 2026, Japanese semiconductor equipment makers once again confirmed AI's huge pull on the semiconductor industry with record order data. From the industry chain perspective, technologically leading Japanese companies are capturing the dividends of this wave of AI infrastructure construction. Going forward, as wafer fab capacity expansion in Asia-Pacific continues, Japanese equipment makers are expected to maintain strong growth. However, investors should also watch for risks of cyclical peaks and geopolitical volatility.

Saifei Semiconductor News will continue to track Asia-Pacific semiconductor supply chain dynamics and bring you in-depth analysis.