Tokyo Electron

What does it do?

Tokyo Electron (TEL) makes the machines that build computer chips. Think of it this way: chipmakers like TSMC and Samsung need incredibly precise equipment to print tiny circuits onto silicon wafers — TEL builds that equipment. Their machines handle steps like etching patterns into silicon, coating wafers with special chemicals, and cleaning them between steps. Without companies like TEL, there would be no iPhones, AI chips, or modern computers.

How does it make money?

TEL makes money by selling specialized machines to chipmakers around the world. Their biggest product categories are coater/developers (machines that apply light-sensitive coatings to wafers), plasma etch systems (machines that carve circuit patterns into silicon), and deposition systems (machines that layer materials onto chips). Revenue grew from roughly $2.2 trillion yen to $2.4 trillion yen year-over-year, reflecting strong demand from customers in Taiwan, South Korea, China, and North America. They also earn recurring income from servicing and maintaining the machines they have already sold.

Why do investors care?

Investors are excited about TEL because semiconductor equipment spending is tied directly to the global AI infrastructure buildout, which is still in its early innings. TEL holds roughly 15% of the global semiconductor equipment market, making it the third-largest player behind only Applied Materials and ASML. For the thesis to work, chipmakers need to keep expanding capacity, AI demand must remain strong, and TEL must continue winning orders in advanced chip nodes — the cutting-edge processes used to make the fastest chips.