Machine builders are on the rise: profits of companies selling chip equipment have been increasing for eight consecutive quarters, driven by the rapid development of AI

Brief Overview of the Chip Equipment Market

Metric Current Quarter Previous Quarter Average Revenue Growth for Equipment Suppliers >10 % (first time in 3 quarters) 8 % Revenue growth of the nine largest companies 16 % 8 % Total Net Profit Growth 20 % 26 %

What’s Happening in the Market
1. Demand is rising, and profits are not falling

In the midst of rapid AI growth, demand for semiconductors fuels the need for manufacturing equipment. Consequently, equipment suppliers’ financial positions remain stable: the average revenue growth rate exceeded 10 % for the first time in three quarters.

2. Leading Players

The nine largest equipment manufacturers (ASML, Applied Materials, KLA, Lam Research, Tokyo Electron, Advantest, Teradyne, Disco) collectively increased revenue by 16 %. Their net profit rose by 20 %, marking the eighth consecutive quarter of growth above 10 %.

3. Capital Expenditures

- TSMC, Samsung Electronics and SK hynix plan to raise capital spending for chip production expansion; TSMC intends to set a new record in investment amount.

- Among equipment makers:

* ASML – +10 % revenue

* Applied Materials – +8 %

* KLA – +9 %

* Lam Research – +21 %

* Tokyo Electron – +3 %

* Advantest – +16 %

* Teradyne – +75 %

* Disco (the only one of the nine) – decline of 5 %.

4. Increase in Service Offerings

With a shortage of new equipment, chip manufacturers increasingly upgrade existing lines. Tokyo Electron, for example, boosts revenue through servicing chip‑fabrication equipment.

5. Market Forecast

The primary silicon wafer processing segment is expected to grow by 15–20 % this year.

Regional View: China
- China remains a key market – 30 % of the eight leading suppliers’ revenue depends on the Chinese market, which grew 8 % YoY to $10.2 bn.

- ASML:

* Revenue from China last year rose by 60 %.

* Last year the market accounted for 33 % of the company’s global revenue; this quarter its share is expected to shrink to 20 %.

The decline in share is linked to restrictions: U.S. export controls and China’s import‑substitution policy hinder ASML equipment supply. Nevertheless, growing needs of Chinese chipmakers suggest sustained demand for imported equipment in coming years.

Incidents
- Applied Materials paid a $252 m fine for selling its equipment to Chinese customers through a South Korean subsidiary, violating U.S. export restrictions.

Thus, despite geopolitical challenges and limited new equipment supplies, the chip‑equipment market shows steady revenue and profit growth, with major manufacturers continuing to invest in production expansion and line modernization.