【News】TOWA to Build New Semiconductor Manufacturing Equipment Plant in Kyoto with 5 Billion Yen Investment

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Major semiconductor manufacturing equipment maker TOWA has decided to invest approximately 5 billion yen to build a new plant for advanced artificial intelligence (AI) semiconductor equipment in Ujitawara Town, Kyoto Prefecture. This move is driven by demands to expand supply capacity amid a global surge in generative AI demand, as well as the strengthening of domestic production structures from an economic security perspective.

Construction of a New 5-Billion-Yen Kyoto Factory and Establishment of a Domestic Production System

TOWA, the world’s largest manufacturer of semiconductor molding equipment, has decided to construct a new manufacturing plant on the premises of its Kyoto East Office located in Ujitawara-cho, Tsuzuki-gun, Kyoto Prefecture. The investment amount is approximately 5 billion yen, and the factory site area will span roughly 5,000 square meters. This new plant is scheduled to undertake the production of manufacturing equipment used primarily in the assembly processes (back-end processes) for advanced semiconductors tailored for artificial intelligence (AI) and other applications. Until now, the company’s semiconductor manufacturing equipment has been produced mainly at overseas plants and domestic contractors, but the establishment of this new in-house plant will establish a direct system for increasing production domestically. At the Kyoto East Office, a new building (Building No. 4) with a total floor area of approximately 3,706 square meters was completed in March 2022 with an investment of about 1 billion yen, expanding production capacity for metal cutting tools and contract manufacturing businesses. This large-scale investment of approximately 5 billion yen will significantly strengthen the production capabilities at the facility, serving as an important base development to promptly respond to the globally soaring demand for cutting-edge semiconductor manufacturing equipment. ＜image-1＞

Economic Security and the Shift Toward Supply Chain Insourcing

Behind the construction of this new plant lie rapidly growing economic security demands and the strategic intent of achieving supply chain self-sufficiency and internalization. In recent years, amid heightened geopolitical risks such as the U.S.-China conflict and experiences with the global semiconductor shortage, building a stable domestic supply chain for semiconductors and their manufacturing equipment has become a critical national-level issue. Also within the Japanese government, as stated in Prime Minister Sanae Takaichi’s policy speech at the extraordinary Diet session on October 5, 2026, a policy has been set forth to boldly promote “crisis management investment” and “growth investment,” strongly attracting domestic investment in specific critical fields such as semiconductors and AI. TOWA’s decision to reduce its reliance on overseas production and establish a supply system centered on directly managed domestic plants aligns with the government’s security strategy and regional industrial cluster plans. By expanding domestic production, the aim is to meet strict quality control requirements and short delivery time demands from key customers, while minimizing the risk of supply disruptions caused by geopolitical troubles.

Surge in Demand for Advanced Packaging Equipment for Generative AI and HBM

The new plant will focus on the production of assembly equipment for cutting-edge semiconductors, which are essential for generative AI accelerators and high-performance computing (HPC). In particular, the manufacturing of high-bandwidth memory (HBM)—such as graphics processing units (GPUs) for generative AI, for which demand is currently surging—requires advanced back-end technology to vertically stack and densely package multiple DRAM chips. TOWA supplies industry-leading equipment for the molding process, which protects and encapsulates individualized chips diced from wafers in resin. With the explosive growth ofليس the generative AI market, the company has received a succession of orders from major global semiconductor manufacturers, including South Korea’s SK Hynix and Samsung Electronics, raising concerns that existing production capacity would be unable to keep pace with medium- to long-term increases in demand. The construction of the new plant will dramatically boost shipping capacity for next-generation advanced packaging equipment, establishing a framework to securely capture the wave of global AI infrastructure investment.

TOWA’s Market Superiority and the Expansion of the Global Semiconductor Market

Proprietary technology boasting the world’s top market share in molding equipment

TOWA is an overwhelming global niche leader, accounting for a global market share of approximately 60% to 80% in the field of “molding equipment,” which encapsulates semiconductor chips in epoxy resin to protect them from the external environment. The company’s greatest strength lies in its “compression molding technology,” which precisely immerses semiconductor substrates into molten resin for molding. Compared to the conventionally mainstream transfer molding method, compression molding prevents the deformation of ultrafine wires and the generation of voids (cavities) caused by resin flow, achieving exceptionally high yields and reliability in advanced semiconductors that are increasingly becoming thinner and multi-layered. According to analyst reports from firms such as Ichiyoshi Research Institute, TOWA holds numerous core patents related to the compression method, establishing a proprietary technology that leaves no competitors in its wake. With an overseas sales ratio exceeding 80%, the company has earned immense trust from major semiconductor manufacturers worldwide.
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Global Semiconductor Manufacturing Equipment Market to Reach 9 Billion by 2028

According to the mid-2026 market forecast for global semiconductor manufacturing equipment released in July 2026 by the international industry association SEMI, global sales of new manufacturing equipment in 2026 are projected to reach $165.9 billion, a 23.2% increase year-over-year, setting a new record high. Furthermore, driven by the strong tailwind of AI investment, market growth is expected to continue for five consecutive years, expanding to $229.5 billion by 2028. One of the pillars supporting this growth is the acceleration of investment in back-end equipment, accompanying the growing structural complexity of devices and the expanding adoption of advanced packaging. Within the back-end segment, the test equipment market is anticipated to grow to $15.3 billion in 2026 (up 31.0% year-over-year) and $20.8 billion in 2028, with the assembly and packaging equipment market projected to reach $6.7 billion in 2026 and $8.6 billion in 2028. The advanced packaging field, on which TOWA is focusing, is showing momentum that outpaces the growth rate of the broader semiconductor market, and the timing of its capital expenditure via the construction of a new plant coincides with this wave of market expansion.

Medium- to Long-Term Business Outlook and Future Focus Points

Roadmap to a V-Shaped Earnings Recovery in the Fiscal Year Ending March 2027 and the 100 Billion-Yen Target

TOWA’s full-year financial results are on a strong V-shaped recovery track, driven by the full-scale materialization of demand for generative AI. For the fiscal year ending March 31, 2026, consolidated net sales were 54.365 billion yen (up 1.7% year-on-year) and operating profit was 6.917 billion yen (down 22.1% year-on-year). However, in the consolidated earnings forecast for the following fiscal year ending March 31, 2027, significant increases in both revenue and profit are expected, with net sales projected at 64 billion yen (up 17.7% year-on-year) and operating profit at 10.24 billion yen (up 48.0% year-on-year). Against the backdrop of this profit recovery, the company has announced plans to increase its annual dividend by 4 yen from the previous fiscal year to 24 yen. Furthermore, the company has set a long-term goal of reaching 100 billion yen in net sales by the fiscal year ending March 31, 2032. Since the company’s existing production capacity has traditionally been limited to around 75 billion yen in terms of net sales, expanding its production bases was essential to achieving this goal. The construction of the new Kyoto plant, costing approximately 5 billion yen, serves as a strategic move directly linked to eliminating supply bottlenecks toward the 100 billion yen net sales target.

Smart Factory Transformation and Improving Capital Investment Efficiency

Along with the launch of the new plant, TOWA will promote the smart factory transformation of the entire factory, including the existing Kyoto East Office building, and fundamentally strengthen production efficiency. Through the introduction of automation equipment and IoT systems within the plant and the optimization of process layouts, it will build a system for the stable supply of high-quality products while reducing production costs. Academic research (an empirical analysis published by The Securities Analysts Association of Japan) also shows that companies with high-quality financial reporting and appropriate monitoring systems enhance the efficiency of capital expenditures, suppressing wasteful overinvestment while concentrating funds on valuable investment opportunities. TOWA’s investment of approximately 5 billion yen goes beyond a mere expansion of floor space, signifying the establishment of a highly efficient production platform to capture the demand for cutting-edge AI semiconductors. Moving forward, key points to watch will be the construction and completion schedule of the new plant, the timing of the mass-production line startup, and market introduction trends for next-generation molding equipment.

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