Tokyo Electron - Company History

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Financial history 1970–2026 — revenue, cost structure, balance sheet, cash flow and key ratios, year by year →

Founded 1963
Origin TBS
Founding location 東京都港区
Core business at founding Import and sale of semiconductor production equipment
Listed 1980
President Kawai Toshiki President since 2016 (age 63, as of 2026)
Current priority R&D · New product development Equipment for advanced logic and HBM for artificial intelligence
Founding
In November 1963 Kubo Tokuo, who had resigned from the trading house Nissho (later Nissho Iwai), took an investment of $13,889 (¥5m) in capital from Tokyo Broadcasting System and set up Tokyo Electron Laboratories in Minato-ku, Tokyo. The initial business was exporting VTRs and car radios and importing electronic equipment, with a staff of only a few people. In May of the following year, 1964, Kotaka Toshio, who had handled the import and sale of semiconductor production equipment at Nissho, joined him, and in October of that year the company beat the general trading houses in open competition to become the sole agent for Fairchild. The $111,111 (¥40m) price of the first IC tester was paid with a bank loan guaranteed by Tokyo Broadcasting, and the machine was delivered to Nippon Electric. At the time it struck out on its own on a broadcaster's money, opinion in Japan still held the practical use of the IC itself in doubt.
The Decision
It settled in advance the conditions a profitable product had to meet, and climbed down from the businesses that did not meet them. In the year to September 1974 the export division, which accounted for six-tenths of sales, lost about $1M (¥300m), and in December of that year Kotaka Toshio set out to the company the seven conditions for choosing what it would handle. That the market be growing; that the product not be the mainstay of a large maker; that others not be able to enter easily; that it sell to first-class companies so that collection of payment gave no worry; that it not require large amounts of capital; that it not fall in price; and that added value and margins be high. Neither car radios nor calculators met those conditions, and by 1978 the company had wound up its export sales of consumer goods. Exports fell from $35M (¥9bn) in the year to September 1977 to $13.9M (¥3bn) the following period, and reached zero in the year to September 1979. Letting go of more than half of sales is what made room to concentrate resources on IC production equipment.
Today
As a single-segment equipment maker, it earns nine-tenths of its sales outside Japan. Of revenue of $15.4B (¥2.44tn) in the year to March 2026, China accounted for $5.3B (¥833bn), South Korea for $3.4B (¥544bn) and Taiwan for $3.2B (¥500bn), while Japan came to only $1.5B (¥239bn). That customer map began in 1994, when the company switched its overseas selling wholly from distributors to direct sales. Its share in the United States rose from 8 per cent at the end of 1995 to 34 per cent at the end of 1999, and its own products rose from 55.8 per cent of sales in the year to March 1994 to 94.9 per cent in the year to March 2000, completing the move from trading house to equipment maker. Demand for advanced logic and HBM DRAM for generative AI has carried the growth since the year to March 2025, leaving operating profit of $4.0B (¥625bn) and an operating margin of 25.6 per cent.
Competition
After the road to becoming one with the industry leader closed, it widened its product range alone. In 2013 it agreed a merger of equals with Applied Materials, the largest equipment maker in the world, but the United States Department of Justice judged that the remedies the two proposed jointly could not replace the competition the merger would remove, and in 2015 the combination was dissolved. With the option of matching scale gone, the company stacked up positions process by process, and its world share in dielectric etch reached 60 per cent in calendar 2024. Holding no lithography equipment, it competes neither with ASML nor with Nikon, which retreated to the back end; instead it covers the ground around front-end processing as an area. In back-end processing too, sales of temporary bonders and debonders for HBM reached $200.5M (¥30bn) in the year to March 2025, about three times the level of two years earlier, and multiplying the kinds of equipment it makes did the work that scale would have done.

Timeline

1963–1993The instigator of Japan's IC industry: from trading house to manufacturer

  1. 1963Tokyo Electron Laboratories founded in Tokyo with ¥5m capital from Tokyo Broadcasting
  2. 1964Agency agreement with Thermco; imports of diffusion furnaces begin
  3. 1964Sole agency for Fairchild won; first IC tester delivered to Nippon Electric
  4. 1968Tel-Thermco established in Yokohama; Osaka branch opened
  5. 1972Tokyo Electron America, Inc. established
  6. 1974Kubo Tokuo becomes president; withdrawal from consumer-goods exports decided
  7. 1978Export business fully wound up; renamed Tokyo Electron Limited
  8. 1980Listed on the second section of the Tokyo Stock Exchange
  9. 1981Yamanashi works opened
  10. 1983First wholly owned factory built in Kumamoto
  11. 1984Telmec absorbed; moved up to the first section of the TSE
  12. 1986First operating loss since founding; Kotaka Toshio returns as president
  13. 1988All shares of Tel-Thermco acquired
  14. 1993Tokyo Electron Sagami and Tokyo Electron Tohoku merged

1994–2015Globalisation, its light and its shadow, up to the Applied Materials plan

  1. 1994Tokyo Electron Europe Ltd. established in Britain
  2. 1994Overseas sales switched wholly from distributors to direct sales
  3. 1997Barry Mayson becomes president of the American subsidiary
  4. 1998Tokyo Electron Arizona, LLC established
  5. 2000All shares of Supercritical Systems, Inc. acquired
  6. 2001All shares of Timbre Technologies, Inc. acquired
  7. 2002First consolidated net loss, ¥19.9bn, ends the run of profits
  8. 2003Sato Kiyoshi named president on the nomination committee’s recommendation
  9. 2003Tokyo Electron Device listed; Shanghai and TEL Technology Center America set up
  10. 2010Operating loss ¥2.2bn and net loss ¥9.0bn after the Lehman shock
  11. 2012Entry into solar-panel production equipment via the Oerlikon Solar acquisition
  12. 2013Merger of equals agreed with Applied Materials, Inc.
  13. 2014Exit from the solar business; extraordinary loss of ¥47.7bn
  14. 2015Merger agreement with Applied Materials dissolved

2016–2025Going it alone, and the profit surge of the generative-AI era

  1. 2016Kawai Toshiki becomes president; development unified across equipment lines
  2. 2018Sales pass ¥1 trillion for the first time, at ¥1,130.7bn
  3. 2019Medium-term plan targets ¥2 trillion sales and a 30% operating margin
  4. 2022Sales reach ¥2,003.8bn, two years ahead of the plan
  5. 2022New medium-term plan to March 2027: ¥3 trillion sales, 35% operating margin
  6. 2022New development building approved at Tokyo Electron Kyushu, Koshi
  7. 2023Each ordinary share split into three
  8. 2024Sales to China reach ¥813.3bn, 44 per cent of the total
  9. 2025Generative-AI demand lifts sales to ¥2,431.5bn
  10. 2025New production building announced at Tokyo Electron Miyagi, about ¥104bn
  11. 2025Process development building at Koshi completed, about ¥47bn
  12. 2026Sales ¥2,443.5bn and operating profit ¥624.9bn

Founding Story

1963–1993The instigator of Japan's IC industry: from trading house to manufacturer

Everything that Tokyo Electron later became was set in these thirty years, when a firm founded to import and export electronics decided what it would not do. It gave up the export business that earned most of its revenue, wrote down seven conditions for what it would sell instead, and moved — through joint ventures, its own factories and a string of absorptions — from selling other people's machines to building its own.

Five million yen from Tokyo Broadcasting, and the agency rights for IC equipment

In November 1963 Kubo Tokuo (久保徳雄), then an employee of the trading house Nissho (today Nissho Iwai), left the firm and set up Tokyo Electron Laboratories in Minato-ku, Tokyo[1], with an investment of $13,889 (¥5m) from Tokyo Broadcasting System[2]. Kubo said in later years that he had struck out on his own carrying the dream of building an ideal company[3], and admitted that behind it lay the experience of not being trusted from above inside a general trading house, which had drained his motivation. He put the word Laboratories into the name because he believed that what would be needed was not a plain trading house but technical service that stood close to manufacturing[4]. The initial business was exporting VTRs and car radios and importing electronic equipment[5], with a staff of only a few people. In May of the following year, 1964, Kotaka Toshio (小高敏夫), who had handled the import and sale of semiconductor production equipment at Nissho, joined him[6]. Kotaka had come to feel keenly that this was a business unsuited to the constitution of a general trading house[7], and he meant to try his own idea of the right way to do it at the new company.

A week after joining, Kotaka flew to the United States, and at the end of May 1964 began importing and selling Thermco diffusion furnaces[8]. In its first year the company rented no more than about thirty square metres of office space inside the Tokyo Broadcasting headquarters building[9], yet in October of that year[10] it beat the general trading houses in open competition to become the sole agent for Fairchild[11]. The first IC tester was paid for with $111,111 (¥40m) raised as a bank loan guaranteed by Tokyo Broadcasting[12], and delivered to Nippon Electric. In Japan of 1963 and 1964, opinion was overwhelmingly sceptical about putting ICs to practical use[13]. Kotaka went round Nippon Electric, Hitachi, Toshiba and Fujitsu preaching the future of the IC, and personally escorted each firm's head of development to Fairchild's IC plant[14]. In the company newsletter of September 1974, Kotaka reported that about 180 large testers had been delivered in Japan and that the company held the number-one share of the Japanese market[15].

Full withdrawal from consumer-goods exports, and seven conditions for choosing what to sell

The Nixon shock of August 1971 and the move to floating exchange rates that followed halved the company's profits[16]. The oil shock of 1973 compounded it, and in the year to September 1974 the export division — which accounted for six-tenths of sales — lost about $1M (¥300m)[17]. In the newsletter of December that year Kotaka reported internally that recurring profit had fallen from $1.2M (¥330m) in the previous period to $682,594 (¥200m), and that the cause lay in the export division's losses[18]. On the profit side the import division was earning about $1.7M (¥500m)[19]. Kotaka looked back on how, in car stereos, Matsushita Communication Industrial and other large makers had entered one after another and put production onto a full-scale footing; there was almost no gap in technology or product, and a small or mid-sized firm could not compete[20]. Every export product was sold OEM under the brand of a European or American company, so the movements of the end consumer could not be read, and when orders from the United States were suddenly cut off, mountains of inventory piled up[21]. After the one managing director who had opposed complete withdrawal most fiercely resigned, and two others left for separate reasons such as starting out on their own[22], the Kubo-as-president, Kotaka-as-executive-vice-president line-up took office in November 1974[23].

In the newsletter of December 1974[24] Kotaka set out a bold contraction and abolition of unprofitable divisions, and listed seven conditions for choosing what the company would handle[25]: that the market be growing from here; that rivals be few and the product not the mainstay of a large maker; that others not be able to enter easily; that the customers be first-class companies so that collection of payment gave no worry[26]; that handling it not require large amounts of capital; that it not fall in price while held in stock; and that added value and margins be high[27]. Exports of car radios, car stereos and calculators plainly failed those seven conditions[28]. The withdrawal proceeded in stages: export sales of calculators were stopped in September 1976, and of car stereos and transceivers in September 1978[29]. Exports fell from $35M (¥9bn) in the year to September 1977 to $13.9M (¥3bn) the following period, and reached zero in the year to September 1979[30]. Kubo said the company had pulled out because it had learned that, in markets expanding that fast, it could not win without a large sales network and large capital[31].

From a hybrid trader-manufacturer to a manufacturer

In the year to September 1979, imported goods made up about 75 per cent of the products handled[32]; the probers of the subsidiary Telmec and the diffusion furnaces of Tel-Thermco, the joint venture with Thermco, accounted for a little over 20 per cent of the whole[33]. Since Tel-Thermco had been established in Yokohama in 1968[34], the diffusion furnaces had been made in Japan. Products manufactured in-house by affiliates accounted for 25 per cent of sales[35], and even on imported systems the company took on work that belonged to the manufacturer's domain — modifications to suit customer requirements and software development[36]. Kubo explained that these products demanded a high level of technical skill in after-sales service and heavy investment in developing that capability, so that the recurring margin came out closer to a manufacturer's than a trader's[37]. In October 1978 the company changed its name to Tokyo Electron Limited[38], and in June 1980 it listed on the second section of the Tokyo Stock Exchange[39]. Of a Japanese market for semiconductor production equipment worth about $441.1M (¥100bn) in fiscal 1980, the company held roughly 25 per cent — first place[40] — and in three product lines, diffusion furnaces, high-pressure oxidation furnaces and low-pressure CVD furnaces, its domestic share reached 70 per cent each[41].

In 1983 it built its first wholly owned factory, in Kumamoto[42]; in February 1984 it absorbed the IC-equipment maker Telmec[43]; and in March of the same year it moved up to the first section of the Tokyo Stock Exchange[44]. On promotion to the first section, president Kotaka asked that the company's industry classification be changed from trading to electrical machinery, and was refused[45]; he said that the in-house factory, the absorption and the first-section listing were all actions taken because he did not want to be called a trading house[46], and were meant to attract engineers[47]. Sales, which had grown to $629.3M (¥150bn) in the year to September 1985[48], fell to $500.2M (¥84bn) in the year to September 1986 in the semiconductor slump[49], and operating profit turned to the first loss since the founding[50]. In October 1986 president Yoshida Minoru (吉田稔) resigned, and Kotaka, who had stepped up to chairman two years earlier, returned as president[51]. Kotaka said Yoshida had offered his resignation to take responsibility for the deteriorating results[52], though testimony also circulated that a motion to remove him had been tabled[53]. The move in-house continued afterwards: in February 1988 the company acquired all the shares of Tel-Thermco[54], and in April 1993 it merged Tokyo Electron Sagami and Tokyo Electron Tohoku[55].

Read the full history in Japanese →

Notes

  1. Tokyo Electron, annual securities report, corporate history section↩
  2. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  3. Nikkei Business, 18 March 1991↩
  4. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  5. Tokyo Electron, annual securities report, corporate history section↩
  6. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  7. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  8. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  9. Nikkei Business, 26 April 1984↩
  10. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  11. Nikkei Business, 26 April 1984↩
  12. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  13. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  14. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  15. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  16. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  17. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  18. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  19. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  20. Nikkei Business, 31 May 1982↩
  21. Nikkei Business, 31 May 1982↩
  22. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  23. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  24. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  25. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  26. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  27. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  28. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  29. Securities 証券, vol.32 no.6 (375), June 1980, published by the Tokyo Stock Exchange↩
  30. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  31. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  32. Securities 証券, vol.32 no.6 (375), June 1980, published by the Tokyo Stock Exchange↩
  33. Securities 証券, vol.32 no.6 (375), June 1980, published by the Tokyo Stock Exchange↩
  34. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  35. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  36. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  37. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  38. Securities Analysts Journal 証券アナリストジャーナル, July 1980↩
  39. Tokyo Electron, annual securities report, corporate history section↩
  40. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  41. The Maverick and His Clan: The Miracle of the Fireball Squad 異端の男とその一族 火の玉集団・東京エレクトロンの奇跡, Tokyo Electron, April 1982↩
  42. Nikkei Business, 26 April 1984↩
  43. Nikkei Business, 26 April 1984↩
  44. Tokyo Electron, annual securities report, corporate history section↩
  45. Nikkei Business, 26 April 1984↩
  46. Nikkei Business, 26 April 1984↩
  47. Nikkei Business, 26 April 1984↩
  48. Securities Research 証券調査, no.241↩
  49. Securities Research 証券調査, no.241↩
  50. Nikkei Business, 2 February 1987↩
  51. Nikkei Business, 2 February 1987↩
  52. Nikkei Business, 2 February 1987↩
  53. Nikkei Business, 2 February 1987↩
  54. Tokyo Electron, annual securities reports for earlier years, corporate history section↩
  55. Tokyo Electron, annual securities report, corporate history section↩

References & sources

  1. Tokyo Electron Limited (annual securities reports), including the corporate-history section, and the company's IR materials: press releases, results briefings and the medium-term management plan briefing of 8 June 2022.
  2. The Maverick and His Clan: The Miracle of the Fireball Squad, Tokyo Electron, April 1982 — the source for the founding, the Fairchild agency and the withdrawal from exports.
  3. Nikkei Business: 31 May 1982 and 26 April 1984, both carrying remarks by president Kotaka Toshio, the latter under the title; 2 January 1995; 9 October 2000.
  4. Securities, vol.32 no.6 (375), June 1980, published by the Tokyo Stock Exchange — NDL Digital Collections.

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