A Kyoto-based enterprise is reaping significant benefits from the surge in demand for AI, necessitating high-bandwidth memory, by dominating a crucial niche in the semiconductor manufacturing process.
The firm in focus, Towa Corp., has secured a dominant position, controlling two-thirds of the global market for chip molding equipment. This pivotal process involves encasing the semiconductor die and wires in resin, safeguarding them against environmental damages and enabling the stacking of chips, which is vital for enhancing the capabilities of graphics processors like those from Nvidia Corp. in AI training.
Following a notable increase in demand for sophisticated chips, Towa Corp.'s stock witnessed an initial surge of 2.3% before slightly retracting, marking a near fivefold increase over the past year. This uptick is attributed to the growing complexity in semiconductor designs driven by the need for higher performance chips.
Major semiconductor manufacturers, including SK Hynix Inc., Samsung Electronics Co., and Micron Technology Inc., have turned to Towa for its advanced compression molding tools, with significant orders placed since the previous summer. The cost of each machine stands at approximately ¥300 million ($2 million), boasting gross profit margins exceeding 50%.
Towa's president, Hirokazu Okada, in an interview, highlighted the indispensability of their technology for the production of high-end chips, particularly for generative AI, boasting nearly a complete market share in molding machinery for such advanced chips.
Looking ahead, Towa is on the brink of launching a new product aimed at reducing molding costs by half and doubling the processing speed. The development is nearing completion, with customer trials expected soon and mass production set to commence by 2028.
Furthermore, Towa's innovation extends to a patented technique for resin dipping of chip dies, which minimizes material use and results in thinner chip packages with fewer defects.
Since its establishment in 1979, Towa's pioneering sealing technologies have become a standard in the industry. Its meticulous approach to manufacturing is a testament to the company's commitment to excellence, a philosophy deeply ingrained in its operations.
With a vision to double its annual revenue by 2032, Towa is exploring avenues for capacity expansion to generate an additional ¥75 billion in revenue, as shared by Okada, who succeeded the company's founder Kazuhiko Bando in 2012.
Towa's unique position in the market is further solidified by its competitive edge in compression molding, a domain where it faces no real competition due to its proprietary technology and strong customer relationships.
