Wafer-Fab Equipment & Lithography

Disco Corporation reported preliminary non-consolidated sales of ¥118.5 billion for the quarter ended September 2026, up from ¥85.3 billion a year earlier, with first-half sales of ¥213.6 billion versus ¥160.8 billion in the prior-year period. The semiconductor equipment maker also received a Zacks Rank #1 (Strong Buy) after analysts steadily raised earnings estimates over the past three months. The preliminary figures came in comfortably above the prior year and ahead of earlier non-consolidated guidance, reinforcing the near-term earnings story. The company continues to flag volatile semiconductor and electronic components demand, leaving cyclicality risk embedded in its investment case. Two fair value views in the Simply Wall St Community on Disco span roughly ¥25,000 to ¥81,000.

ASML Holding N.V. is scheduled to report third-quarter fiscal 2026 earnings on Oct. 14, before market open, with the Zacks Consensus Estimate pegged at $13.18 billion in sales and $12.47 per share. The company has delivered a four-quarter earnings surprise of 3.91%, on average, and its Earnings ESP of +4.49% with a Zacks Rank #3 points to a likely earnings beat. During the quarter, ASML announced a collaboration with Xanadu Quantum Technologies Limited to advance lithography processes for photonic quantum hardware, expanded its strategic partnership with Samsung Electronics in High-NA EUV lithography, began construction of a second major industrial campus in the Brainport region of the Netherlands expected to cover approximately 350,000 square meters and accommodate up to 20,000 workplaces, and extended its collaboration with Intel, whose Panther Lake production uses ASML's High NA EUV lithography. Management expects 2026 advanced foundry Logic revenues to rise about 25%, Memory revenue to increase 75%, EUV revenues to grow roughly 45%, and DUV, metrology and inspection revenue to increase about 25%, with customer commitments extending into 2027 and 2028. China is expected to account for roughly 20% of 2026 sales, leaving ASML exposed to changes in export restrictions, while the stock trades at a forward price-to-sales ratio of 11.74 versus the industry average of 11.11.

Applied Materials announced that the UCLA Samueli School of Engineering will join its EPIC Center in Silicon Valley as a research partner, with researchers working alongside Applied's scientists and engineers to shorten the time it takes to move semiconductor breakthroughs from research to commercialization. The collaboration will focus on 3D chip scaling, advanced packaging and the discovery of new materials for improving energy-efficient AI compute performance, and will complement UCLA's Semiconductor Hub, which Applied joined as a co-founding member earlier this year. Dr. Prabu Raja, President of the Semiconductor Products Group at Applied Materials, said the EPIC Center will convene the industry's top innovators to accelerate the path from breakthrough research to full-scale manufacturing, while Ah-Hyung "Alissa" Park, Ronald and Valerie Sugar Dean of UCLA Samueli, said the collaboration builds on the school's legacy of pioneering semiconductor research. UCLA researchers will gain access to advanced chipmaking tools so new ideas can be validated and tested in a commercial fab environment. Applied's EPIC Center, which the company describes as the largest-ever U.S. investment in advanced semiconductor equipment R&D, is on track to become operational in 2026.

Tesla and SpaceX have committed an initial $16.8 billion to Terafab, Elon Musk's plan to build one of the world's largest chip-making complexes in Grimes County, Texas, covering more than 100 million square feet and expected to start manufacturing chips by 2029. Intel Corp. joined the project in April, committing to design, make and package chips, and Musk has said the plant will use Intel's next-generation 14A process, a significant boost for an Intel foundry business that lost more than $10 billion at the operating level in 2025. Musk shut down speculation that Taiwan Semiconductor would help run the Texas plants, writing on X that Tesla and SpaceX will build and run the fab themselves, with TSMC at most given leased space inside the complex. The vertically integrated facility is designed to handle chip manufacturing, packaging and testing under one roof, with chips mostly built for edge computing and inference to power Tesla's Optimus robots and Cybercabs along with high-performance processors for SpaceX's planned space-based data centers. Investors positioned for the buildout could look to chip equipment makers such as ASML Holding, Applied Materials, Lam Research and KLA Corp, packaging and testing players including Amkor Technology, ASE Technology and Teradyne, materials and utilities suppliers such as Linde and Entegris, power and electrical infrastructure names including Eaton, Vertiv, Quanta Services and GE Vernova, or semiconductor ETFs such as the VanEck Semiconductor ETF and iShares Semiconductor ETF.

Applied Materials now expects its Applied Global Services business to grow more than 20% in 2026 and to maintain a sustainable long-term annual growth rate in the mid-teens. In the third quarter of fiscal 2026, AGS revenues reached a record $1.78 billion, up 22% year over year, while non-GAAP operating margin rose to 30.1% from 27.3%. More than 37,000 chambers are connected to AIx software for monitoring, diagnostics and predictive analytics, and the company added more than 1,500 manufacturing and AGS support employees in the quarter as it plans to double quarterly system output from current levels by 2028. China represented 28% of total revenues in the third quarter of fiscal 2026, up from 27% in the second quarter, and Applied Materials now expects China revenues to increase in 2026, led by 28-nanometer foundry-logic investment. Applied Materials expects non-GAAP earnings of $4.02 per share, plus or minus 20 cents, indicating 85% year-over-year growth at the midpoint, while the Zacks Consensus Estimate suggests growth of 87%.

Major analysts expect ASML Holding to post stronger than anticipated third-quarter results, supported by robust demand for its EUV and DUV lithography systems from leading semiconductor manufacturers with large, committed orders. The €618.4 billion semiconductor equipment group, based in GB, supplies the lithography machines chipmakers rely on to pattern advanced processors used in AI and high performance computing. Expectations of a stronger Q3 reflect a backlog that already covers much of ASML's EUV output for 2027, giving analysts more clarity on tool shipments and service activity that shape their earnings models. The most concrete marker for investors will be how management frames 2027 capacity and demand for low numerical aperture EUV tools, along with any update on shipment plans for 2027 and 2028 and associated service revenue expectations. The attention on ASML is part of a broader build out of chipmaking capacity tied to AI and high performance computing, a theme that draws in a wider group of suppliers.

ASML Holding N.V. raised its 2026 revenue outlook to EUR 43 billion to EUR 45 billion as customers increase capacity for advanced logic and memory. The company generated EUR 9.3 billion of revenue in the second quarter, up 21.3% year-over-year, while net income reached EUR 2.9 billion. Management expects EUV system sales to grow more than 45% this year, while memory-related system sales are expected to increase more than 75%. Installed-base revenue reached EUR 2.8 billion in the second quarter, nearly EUR 300 million above guidance, and the company expects that business to grow more than 30% this year. ASML said customers are already planning capacity for 1.4-nanometer chips, while advanced logic and DRAM are both seeing increasing lithography intensity, and Intel is already using a High-NA EUV system on its 18A process to produce some Core Ultra Series 3 processors. Management expects China to account for around 20% of 2026 sales, while restrictions on advanced semiconductor equipment can limit what ASML is allowed to sell into the country, and the stock trades at about 28.9x forward earnings.

KLA has been upgraded to a Zacks Rank #2 (Buy), a rating that places the semiconductor equipment maker in the top 20% of the more than 4,000 stocks covered by the Zacks Rank system. The upgrade reflects an upward trend in earnings estimates, with the Zacks Consensus Estimate for KLA rising 9% over the past three months. The company is expected to earn $5.44 per share for the fiscal year ending June 2027, which represents no year-over-year change. Zacks said the rating change is essentially a positive comment on KLA's earnings outlook that could have a favorable impact on its stock price. Under the Zacks system, only the top 5% of covered stocks receive a Strong Buy rating and the next 15% receive a Buy rating.

Applied Materials announced expanded collaborations at its new US$5.00 billion EPIC Center, bringing in KIOXIA to advance next-generation memory and extending its longstanding partnership with BE Semiconductor Industries to co-develop advanced packaging and interconnect technologies for AI-focused chips. The twin push into cutting-edge memory and packaging research and development highlights Applied Materials' ambition to sit at the center of AI-era chip design and manufacturing innovation. The company said the new EPIC Center collaborations with KIOXIA and Besi look more like medium-term positioning than near-term revenue drivers, but they subtly shift the catalyst mix toward advanced packaging and 3D memory integration as critical proof points. The stock's valuation, a BIS settlement reminder on export controls, and concentration in a cyclical industry remain the key risks that could pressure sentiment if conditions change. Ten Simply Wall St Community fair value views span roughly US$279 to US$845 per share, showing how far apart individual estimates can be.

Jefferies named its top stock picks in Japan's semiconductor production equipment sector and raised price targets and earnings forecasts across its coverage, citing record orders and earnings growth driven by artificial intelligence and high-performance computing demand in logic semiconductors and advanced packaging. Tokyo Seimitsu saw its price target lifted to ¥24,000 from ¥23,000 on 25 times fiscal 2028 estimated earnings; the company posted first-quarter sales of ¥36.7 billion, up 19% year-over-year, operating profit of ¥5.9 billion, up 29%, and record first-quarter orders of ¥53.2 billion, up 102% year-over-year, while raising its first-half orders outlook to a 50% increase from 20% and lifting fiscal 2027 sales guidance to ¥189.0 billion, above its ¥185.0 billion medium-term goal. Rorze Corp kept its ¥6,000 price target on 25 times fiscal 2028 estimated earnings, with Jefferies raising its fiscal 2027 operating profit estimate to ¥44.0 billion from ¥42.0 billion and its fiscal 2028 estimate to ¥52.0 billion from ¥47.3 billion; Rorze reported first-quarter sales of ¥37.2 billion, up 12%, operating profit of ¥10.2 billion, up 21%, and semiconductor orders of ¥42.0 billion, 1.9 times the prior-year level and above the previous record of ¥34.0 billion, with a semiconductor-related equipment order backlog of ¥62.2 billion. Advantest had its price target raised to ¥41,000 from ¥38,500 on 35 times fiscal 2028 estimated earnings, reflecting a premium for high profitability; it delivered record first-quarter sales of ¥367.5 billion, up 39%, and operating profit of ¥190.0 billion, up 53%, and raised its 2026 SoC tester market outlook to $10.5-11.5 billion from $8.7-9.5 billion, with full-year fiscal 2027 guidance lifted to sales of ¥1.714 trillion, up 51%, and operating profit of ¥846.0 billion, up 69%.

Zacks Investment Research named Lam Research, Taiwan Semiconductor Manufacturing and Marathon Petroleum as stocks to buy before third-quarter earnings, citing Technology and Energy as the two strongest sectors. S&P 500 earnings are set to rise 24.6% year over year on 11.6% higher revenues, the eighth straight quarter of double-digit growth, with Technology earnings expected up 43.3% and Energy up 114.3%. Semiconductor earnings are projected to jump 85.5% on 62.8% higher revenues, and Energy has drawn the largest upward revision since the quarter began on elevated oil prices tied to Persian Gulf disruptions, with Brent crude above $100 per barrel as of Oct. 5. Lam Research posted $6.72 billion in fiscal 2026 fourth-quarter revenues, up 30%, and guided September-quarter revenues to $8.1 billion plus or minus $400 million with adjusted EPS of $2.15 plus or minus 15 cents, ahead of its Oct. 21 report. TSMC guided third-quarter revenues of $44.6-$45.8 billion and gross margin of 65%-67%, with its report due Oct. 15, while Marathon Petroleum expects third-quarter crude throughput of 2.82 million barrels per day and 94% utilization ahead of its Nov. 3 report.

Onto Innovation has emerged as a key beneficiary of the AI semiconductor investment cycle, with its stock jumping 125.6% in a year, roughly matching the Zacks Nanotechnology industry's 125.7% gain and outpacing the Zacks Computer and Technology sector and the S&P 500 composite, which rose 26% and 15.5%, respectively. The company reported record second-quarter revenue of $343.1 million, up 35.3% year over year and nearly 18% sequentially, with non-GAAP earnings per share of $1.93 versus $1.25 a year earlier, while backlog exceeded $1 billion for the first time. Management raised its second-half 2026 revenue, margin and EPS outlook, guiding third-quarter revenue of $380 to $400 million and expecting gross margin to expand by another 50 basis points in each of the third and fourth quarters, with operating margin improving 200 basis points to 31.5-32.5% in the third quarter and exceeding 33% by year-end. The company also raised its 2026 advanced-packaging growth outlook to at least 80% from more than 50% previously and now expects advanced-nodes revenue to grow more than 35% in 2026, up from about 25%, helped by its Dragonfly G5 platform and more than $200 million in Dragonfly orders from a single OSAT, mostly for 2027 delivery. In April 2026, Onto Innovation agreed to acquire a 27% stake in Rigaku Holdings for about $710 million, and it ended the second quarter with $1.88 billion in cash and short-term investments, though risks include customer concentration, with four customers accounting for 57.3% of first-half 2026 revenue, and a forward price/earnings multiple of 30.23X versus the industry's 5.83X.

SUSS MicroTec SE has entered the wafer-level cleaning market with the launch of its new GreenTec Solutions product line and its first system, the GT200. The company said the wafer-cleaning market it is targeting represents an addressable market of approximately EUR 5.4 billion, driven by advanced packaging, heterogeneous integration and rising semiconductor demand from AI and high-performance computing. The GT200 is designed for research and development, process qualification and production in 200 mm manufacturing environments for MEMS, RF, Power Device and CMOS applications, and combines the company's TurbulenStrip and CrustBuster process technologies in a single platform. SUSS said the GT200 is the first member of a scalable GreenTec platform and that it will expand toward high-volume manufacturing with a dedicated 300 mm HVM platform in 2027, pulled in from its original schedule due to strong customer interest, followed by a 200 mm HVM platform in 2028. Chief Executive Officer Burkhardt Frick called the launch an important milestone in the execution of the company's Ambition 2030 strategy, while Senior Vice President Photomask Solutions Yuta Nagai said the product line represents its vision for a next generation of semiconductor manufacturing where sustainability and process excellence go hand in hand.

ACM Research Shanghai released a voluntary announcement on the evening of September 30, stating that as of September 29, 2026, the company's total orders in hand amounted to 17.073 billion yuan, an increase of 88.20 percent compared with the orders in hand voluntarily disclosed in the same period last year. The company said that since 2026, the semiconductor equipment manufacturing industry has continued its rapid growth trend, and the company's revenue has maintained sustained growth. The previously released half-year report showed that operating revenue in the first half of the year reached 3.718 billion yuan, up 13.87 percent year on year, while net profit attributable to the parent company was 989 million yuan, up 42.14 percent year on year. The company has already disclosed its full-year 2026 earnings forecast, expecting annual operating revenue to be between 8.2 billion and 8.8 billion yuan.

China's chipmaking equipment industry is growing rapidly as wafer fabs across the country turn to buying 100% domestically produced machinery after supply chain restrictions imposed by Western nations. Data from Google Trends for August to September 2026 shows surging keywords including China Semiconductor Tooling Localization and Domestic Wafer Fab Equipment, while retail investors continue searching for ASML China Export Restrictions. One clear beneficiary is NAURA Technology Group, or 002371.SZ, whose product lines cover etching equipment, thin-film deposition, and wafer cleaning tools, placing it close to Applied Materials and allowing Chinese fabs to procure nearly an entire equipment suite in a single package, with its order backlog overflowing under the National Semiconductor Self-Reliance policy. Another is Advanced Micro-Fabrication Equipment, or AMEC, or 688012.SS, a specialist in plasma etching whose CCP and ICP etchers can compete with Lam Research and which has repeatedly won patent cases against major multinational giants, allowing it to rapidly expand its share of the Chinese market from the tens of percent range to a market-leading position.

Applied Materials has entered a major R&D partnership with KIOXIA focused on next generation memory for AI workloads, based at Applied Materials' new US$5b EPIC Center. The collaboration targets memory cell structures, multi chip stacking and advanced packaging, with both companies working to improve manufacturability and density of future memory technologies tailored for AI focused chip architectures. The EPIC Center alliance with KIOXIA is only one piece of what is changing around Applied Materials' AI memory ambitions. Applied Materials builds the tools, software, and services that chipmakers use to manufacture semiconductors at scale, and the KIOXIA partnership plugs directly into its role supplying core production gear for memory and AI focused devices across the US, Asia, and Europe. A key data point to monitor is how quickly EPIC Center projects with KIOXIA convert into production tools and service contracts once the facility becomes operational this year.

UBS analyst Francois-Xavier Bouvignies maintained a constructive outlook on European semiconductor stocks heading into third-quarter 2026 earnings, naming ASML Holding NV, ASM International NV and STMicroelectronics NV as his top three picks in a September 29 research note. The investment bank raised its wafer-fab equipment forecast for 2026 through 2028, projecting total WFE reaching approximately $225 billion in 2027, up 43% year-over-year, with potential to climb toward $275 billion to $300 billion by 2028, and it keeps 2027-2028 earnings estimates more than 10% above consensus across the sector. ASML remains the top pick with a Buy rating and a €2,350 price target, and UBS expects the company to guide fiscal 2027 revenue growth above 30% year-over-year when it reports third-quarter results on October 14, with its third-quarter revenue estimate of €12.1 billion sitting 3% above consensus. ASM International is second, with UBS forecasting 36% revenue growth in fiscal 2027 versus consensus at 29% and 33% growth in 2028 versus consensus at 19%, translating to EPS estimates 10% above consensus in 2027 and 20% above in 2028 ahead of results due October 27. STMicroelectronics completes the top three with a Buy rating and €80 price target, as UBS sees 2027 EPS roughly 20% above consensus, silicon photonics revenues reaching about $2.0 billion in 2027 and $2.5 billion in 2028, and total datacenter revenues of approximately $2.5 billion, or about 14% of group sales, in 2027 rising to roughly $3.8 billion, or 19% of group sales, by 2028, with fourth-quarter revenue guidance expected up approximately 10% quarter-over-quarter when it reports on October 29.

Wells Fargo says semiconductor capital-equipment companies could be the biggest near-term beneficiaries of a potential TSMC expansion of 2-nanometer production. Analyst Joe Quatrochi wrote that reports of the possible capacity increase should be viewed as a potentially incremental positive opportunity for semi cap companies, though timing, size and node details are still unconfirmed. Building additional 2nm capacity would require significant spending on lithography, deposition, etching and inspection equipment, adding a layer of demand for suppliers supporting TSMC's fabs. Quatrochi pointed to the so-called Silicon Prairie as a logical location for a potential second U.S. campus, citing existing semiconductor operations in Texas from Texas Instruments, Samsung, Coherent and Terafab, plus TSMC's design service center in Austin. TSMC's major 2nm customers include Apple, Nvidia, AMD and Qualcomm, with Google, Broadcom, Marvell, Amazon and OpenAI also expected to use the advanced process.

KLA Corporation's backlog climbed to $12.57 billion at the end of fiscal 2026 from $7.86 billion a year earlier, driven primarily by demand tied to the AI infrastructure buildout. In the fourth quarter of fiscal 2026, the company raised its calendar 2026 wafer fabrication equipment market expectation, including advanced packaging, to the low-$150-billion range, up from its earlier view of more than $140 billion and compared with roughly $120 billion in calendar 2025. KLA expects second-half calendar 2026 revenues to increase roughly 20% from the first half as additional supply becomes available, and it forecasts advanced-packaging process-control systems revenues of approximately $1.1 billion in calendar 2026, up more than 70% year over year. Rivals are expanding too: Applied Materials expects its process diagnostics and control business to grow more than 50% in 2026, while ASML Holding expects full-year 2026 advanced foundry and logic revenues to rise about 25%, memory revenues to increase 75% and EUV revenues to grow roughly 45%. KLA shares have risen 55.7% year to date, and the Zacks Consensus Estimate for its earnings stands at $1.18 per share, unchanged over the past 30 days and implying 34.09% year-over-year growth.

JPMorgan analysts said on the 28th that the recent correction in global AI-related trading has improved investors' positioning and made valuations more attractive, which could encourage investors to re-enter the market, particularly in semiconductor stocks. In a report, they noted that tech may not return to past peak levels, but the underlying scenario remains positive and there are many investment opportunities within the AI-related sector. They said investor positioning in the AI space has been cleaned up and valuations have fallen sharply across most areas, while capital expenditure is likely to remain solid despite recent slowdown concerns. On semiconductor stocks, they maintained a bullish outlook citing strong fundamentals, price increases through 2027, and supply-demand tightness expected to persist until 2028, while keeping a cautious stance on software stocks, assessing that AI growth continues to leave the sector's long-term outlook uncertain.

The Singapore Economic Development Board (EDB) said on September 28 that Singapore's manufacturing output in August surged 15.4% year on year, driven by broad-based growth across most industry clusters. On a seasonally adjusted basis, manufacturing output in August fell 0.5% month on month. The report said output rose year on year in nearly every sector except chemicals. The precision engineering cluster soared 33.9%, led mainly by the production of semiconductor machinery and equipment. The electronics cluster rose 28.5% on the strength of server and related products, semiconductors, and data storage equipment, amid strong demand related to artificial intelligence. The transport engineering cluster expanded 9.5%, led by land vehicles and aircraft. The general manufacturing industries cluster grew 1.5%, and biomedical manufacturing edged up 0.4%. Chemicals was the only cluster to decline, with output falling 12.7%, weighed down by the petroleum and petrochemical segments.

Taiwan Semiconductor Manufacturing Co is accelerating its 2-nanometre capacity expansion, with monthly output projected to reach about 120,000 wafers by the end of 2026, ahead of earlier expectations of 90,000 to 100,000 wafers, according to Taiwanese publication EDN. Customers including Apple, Nvidia, AMD, Qualcomm and MediaTek have recently raised orders for TSMC's 2nm family capacity by 10% to 20%, the report said, citing industry sources. TSMC is bringing five 2nm fabs online this year, two in Hsinchu and three in Kaohsiung, according to senior vice president Hou Yung-ching. Hou said first-year 2nm wafer output would be 45% higher than the first-year output of 3nm in 2023, while 2nm capacity is expected to grow at a compound annual rate of 70% from 2026 to 2028.

Micron Technology plans a historic US$100b semiconductor manufacturing complex in the Syracuse, New York area. The planned complex is expected to create about 9,000 Micron jobs and roughly 40,000 additional roles across suppliers and services, and local officials describe the project as a potential anchor for reindustrialization in a region often labeled part of the former Rust Belt. The Syracuse buildout extends Micron's role as a large scale supplier of DRAM and storage into a US anchored manufacturing base targeting AI, cloud and automotive memory demand, alongside its existing US and Japan projects. The clearest signal on whether the bet is working will be how Micron phases Syracuse spending and output into its existing long term customer agreements, especially the 16 supply contracts backed by about US$22b of deposits and commitments. Progress updates on construction timing, tool installs and committed AI memory volumes over the next few years will show whether the complex is filling or chasing demand.

Taiwan Semiconductor Manufacturing is establishing an advanced-packaging testing and training hub in Kaohsiung that will let suppliers test equipment and materials alongside the chipmaker before those technologies reach production. Two buildings are expected to open in late 2029, and TSMC has said the setup could make validation 25% to 50% more efficient. The company's U.S. shares rose about 0.4% to $453.02 around 10:28 a.m. ET Friday, based on Thursday's $451.15 close. The article notes that faster testing is not the same as more chips ready to sell, and that the shares sit 24.45% above GuruFocus's $364.01 GF Value estimate.

Anthropic has signed a computing deal worth at least $11.6 billion with Akamai, sending shares of European companies tied to the artificial intelligence buildout higher on Friday. Under the agreement, Akamai will provide Anthropic with access to central processing units, while Anthropic will receive a warrant to buy Series B shares at $111.33 each, convertible into 7.7 million common shares. The contract is Akamai's largest ever and marks an acceleration of its push beyond its core content delivery and cybersecurity businesses; the company expects to spend about $5.5 billion on capital expenditures tied to the agreement, more than six times its total 2025 capital spending. The deal follows a $1.8 billion computing agreement between the two companies earlier this year, as Anthropic expands capacity for its Claude AI software and strikes deals with providers including Alphabet's Google and Elon Musk's SpaceX. In European trading, ASML Holding rose 2.3%, BE Semiconductor Industries gained 1.6%, ASM International added 1.03%, Infineon Technologies climbed 1.2% and STMicroelectronics advanced 2.01%, while data-center-linked Siemens Energy and Prysmian each rose 2%.

Onto Innovation has raised its full-year 2026 advanced packaging growth outlook to at least 80% from more than 50% previously, citing strong demand for its Dragonfly G5 inspection platform. The company generated $343.1 million of quarterly revenue, up 35.3% year over year, while its inspection business, dominated by Dragonfly systems, grew approximately 30% sequentially on demand from 2.5D logic and HBM applications. Onto launched Dragonfly G5 in March 2026 and disclosed in April that the platform had been qualified for 2.5D AI packaging applications, with demand strongest among HBM manufacturers and AI-focused OSATs, including more than $200 million in Dragonfly orders from a single OSAT, most slated for 2027. Management said demand for the Dragonfly platform is expected to grow more than 50% in 2026 from 2025 and expects further growth in 2027 with no signs of customer overcapacity. Competitors are also benefiting from the same AI-driven spending: KLA now expects 2026 wafer fabrication equipment spending in the low-$150 billion range, up from $135-$140 billion, and Applied Materials expects advanced packaging revenue to grow more than 70% in 2026, up from its prior outlook of more than 50%.

Forecasts from 12 private think tanks and other institutions for the Bank of Japan's September National Short-Term Economic Survey of Enterprises, or Tankan, to be released on the 1st of next month, were all in by the 25th. The average forecast for the business conditions diffusion index, which gauges corporate sentiment, stands at plus 26 for large manufacturers, a 4-point improvement from the previous June survey. The dominant view is that demand related to artificial intelligence and semiconductors will lift sentiment, and this would mark the sixth consecutive quarter of improvement for manufacturers. While industries producing equipment and materials related to semiconductor manufacturing, such as electrical machinery and production machinery, are analyzed as performing well, it has been pointed out that automobiles may act as a drag due to sluggish growth in export volumes. The average forecast for large non-manufacturers is 36, down 1 point from the June survey, with many companies expecting flat or slightly worse conditions due to weak inbound demand and rising costs such as fuel and labor expenses. Based on this Tankan, the Bank of Japan plans to analyze risks such as higher crude oil prices and AI-driven upward pressure on prices, and to look for the timing of an additional interest rate hike.

Applied Materials has committed US$5b to India over the next decade, anchored by a 140 acre semiconductor research park. The announcement comes as the company's share price has climbed 76.39% year to date, with a 1 year total shareholder return of 138.91%, though the 90 day share price return is down 24.34%. Applied Materials closed at $474.25, while the most followed narrative framework places fair value at $627.66, implying the stock is 24% undervalued, and a separate discounted cash flow model estimates future cash flow value at $277.49. The company's broad portfolio and investments in local manufacturing infrastructure, including new Arizona and EPIC centers, position it to capture a greater share of global wafer fab buildouts, with over 100 new fabs or expansions tracked this year. Risks include reliance on China and a concentrated group of large chipmakers, where export restrictions or delayed fab projects could undermine the upbeat narrative.

Lam Research drew fresh attention after management lifted its 2026 wafer fab equipment outlook to the low US$150b range while also flagging a sharp expected rise in advanced packaging revenue. The stock has risen 14.1% over the past week but is down about 19% across the last three months, even as its year-to-date share price return sits near 66% and its 1 year total shareholder return is about 141%. The current share price of $307.16 sits well below a narrative fair value of $423.85, a gap that hinges on how the AI driven memory cycle plays out. On earnings multiples the picture is tougher, with the stock trading on a 52.9x P/E, above both the peer average of 46.9x and a fair ratio of 44.6x. The narrative could break if memory makers pull back capex faster than expected or if China restrictions tighten and compress wafer fab demand.

Takeshi Yamagiwa, chair of the Liberal Democratic Party's parliamentary league on semiconductor strategy, said in an interview with Reuters that Rapidus, the government-backed company aiming for mass production of advanced semiconductors, is "miraculously on schedule at this stage," and that if mass production is achieved, customers will be secured and "financing and an initial public offering will both go smoothly." He added that in the future, a U.S. listing and local production in the demand-heavy American market are "a possibility." Government research and development outsourcing funds for Rapidus have so far reached about 2.4 trillion yen, and last July the company confirmed the operation of a prototype 2-nanometer-class chip at its base in Chitose, Hokkaido, and is moving ahead with preparations for mass production. Yamagiwa said, "It is important to have a mass production system in place by around this time next year and to show the world chips being mass produced." He noted that, reflecting on the "defeat" Japan suffered after holding the top share in the 1980s and then being forced into decline as trade restrictions under the Japan-U.S. semiconductor agreement tightened, the country this time is working with American companies from the outset and aiming for a "win-win relationship," and that a stance of "not half-heartedly withdrawing public support, with the government committed to the very end," is a major difference from the semiconductor strategy of decades ago. Regarding reports that South Korea's SK Hynix is considering building a memory chip plant in Japan, he said, "If there is a manufacturing base in Japan, the supply chain will be stronger. Basically, it should be welcomed," while adding that Japan-South Korea cooperation must be weighed against the risk of technology and talent outflow, and that "we must look strictly at how far we can work together."

Taiwan Semiconductor Manufacturing Company and ASML Holding announced a collaborative industry initiative on September 8 to transition the semiconductor sector to a 12-inch Extreme Ultraviolet photomask format, replacing the 6-inch masks chipmakers currently use for High NA EUV systems. The shift aims to boost scanner productivity, eliminate stitching constraints on ultra-large chips, and lower long-term advanced node manufacturing costs, with the initiative targeting a pilot line by 2031 and 12-inch High-NA production by 2033. TSMC plans to adopt High-NA EUV starting in 2030, with the 12-inch masks providing a multi-year roadmap for scaling complex AI architectures. For ASML, establishing a 12-inch standard locks in the long-term economic case for its High-NA scanner line, supporting its 15% revenue expansion outlook, while for TSMC the larger format helps defend its leading-edge and AI/HPC manufacturing dominance. The decade-long roadmap carries execution risk, as the entire global supply chain, from mask blanks and inspection equipment to automated handling, must retool from scratch, and TSMC faces near-term gross margin dilution from its N2 ramp and overseas fab expansions while ASML contends with gross margin pressure in late 2025 and geopolitical growth uncertainties through 2026.