With the rise of AI, the share price of Towa, a lesser-known Japanese chip equipment company, has soared by an astonishing 390%. Companies such as SK Hynix and Samsung are relying on Towa’s equipment to produce high-end memory chips. Towa is also developing new tools and promises to cut chip forming costs in half.
The core business that supports its five-fold growth in a year is wrapping chip metal molds and wires in resin to protect them from dust, moisture and impact, so they can be safely stacked together to provide graphics processors such as Nvidia. Provide stronger capabilities to better train AI. Currently, the company’s lead is expanding as customers such as SK Hynix, Samsung Electronics and Micron purchase Towa’s compression molding tools.
Towa’s share price soared nearly fivefold during the year due to its pursuit of high-performance chips and the increasing complexity of semiconductor design. Now, as major customers such as SK Hynix, Samsung Electronics and Micron have purchased Towa’s compression molding tools, Towa’s market leadership position has become increasingly unbreakable. Each of these tools is worth approximately $2 million, and some equipment has a gross profit margin of more than 50%.
“Our customers told us that without our technology, they would not be able to make high-end chips specifically for generative AI,” Okada’s president said in an interview. He also mentioned that Towa has almost all market share in the field of high-end chip forming machinery.
With production of high-bandwidth memory chips expected to be fully launched starting next year, Okada said: “Our journey is just beginning.”
Towa is also actively developing new products that aim to reduce forming costs in half and double processing speeds. Development of the new equipment is nearing completion, customers will soon be able to test its performance, and mass production is expected to begin by 2028.
Towa has mastered a technical patent for immersing chips in resin. This method not only uses less materials, but also produces thinner chip packaging and fewer defects. Since its founding in 1979 in suburban Kyoto, Towa has invented the key chip packaging technology that is now widely used, and its expertise in creating vacuum packaging filaments without bubbles has become increasingly important as the cost of integrating more transistors on silicon chips has increased.
Despite competitors such as Apic Yamada Corp. and ASMPT Group, Towa is unique in the compression molding field. As Mitsuhiro Osawa of a research institute puts it: “There seems to be no way to imitate them.” This is due to Towa’s key patents and deep connections with key customers.
On Okada’s work desk, pens washi are arranged in an orderly manner, demonstrating his great emphasis on detail. The Towa CEO said the attention to detail runs through the manufacturing philosophy of the 2000-person company.
Towa has set a goal of doubling its annual revenue over the next decade to reach 100 billion yen by 2032. To achieve this goal, the company plans to expand production capacity, hoping to bring in approximately 75 billion yen in additional revenue. Okada, 72, who succeeded company founder Kazuhiko Bando as company leader in 2012, said: “We are not interested in a market where we can only compete through price cuts. We want to provide technology whose value far exceeds the price.”
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