Tokyo Electron (8035) Q1 2026 earnings summary

Executive summary

• Q1 net sales were JPY 549.5 billion, down 16.1% sequentially and 1.0% year-over-year, with operating income at JPY 144.6 billion and net income at JPY 117.8 billion; results met expectations but reflected a temporary pause in customer capital investments.

• Strategic product development and customer evaluations for advanced logic and 3D integration tools progressed smoothly, with business discussions ongoing and a new development building completed in Miyagi.

• H1 FY2026 outlook remains unchanged, targeting JPY 1.15 trillion net sales and JPY 288 billion operating income.

• The semiconductor market grew overall, driven by AI server demand, despite sluggish general-purpose semiconductor demand.

Financial highlights

• Gross profit was JPY 253.9 billion, down 18.2% quarter over quarter; gross margin at 46.2%, and operating margin at 26.3%, both lower than previous periods.

• Field solution sales reached JPY 141.2 billion, up JPY 2.2 billion quarter over quarter.

• R&D expenses for Q1 FY2026 were JPY 62.1 billion, capital expenditures JPY 52.8 billion, both up year-over-year.

• Free cash flow was positive at JPY 20.7 billion for the quarter.

• Cash and cash equivalents at quarter-end were JPY 367.5 billion, down JPY 128.7 billion due to dividends and taxes.

Outlook and guidance

• FY2026 full-year net sales forecast revised to JPY 2.35 trillion, with operating income at JPY 570 billion and an operating margin of 24.3%.

• Net income forecast for FY2026 reduced to JPY 444 billion; EPS forecast at JPY 969.12.

• Dividend per share for FY2026 expected at JPY 485, with a 50% payout ratio and flexible consideration for share repurchases.

• WFE market for calendar 2025 expected to grow slightly to $115 billion; FY2026 WFE market outlook revised to -5% year-over-year.