Tokyo Electron

Revenue grew 33% year over year as TSMC, Samsung, and Intel all raced to expand capacity for the AI chip boom. Tokyo Electron has near-monopoly market share in coater developer tools, the equipment that prepares wafers for lithography. Net margins of 21% reflect the pricing power that comes with being one of only a handful of suppliers in the world.

By 2027, AI chips are expected to consume 86% of TSMC's leading edge production. The only way to fix the shortage is to build more fabs, and every new fab buys from Tokyo Electron. With the largest customers all expanding simultaneously, the equipment order book stretches multiple years out. This is one of the cleanest ways to bet on the entire AI chip ecosystem expanding.

Tokyo Electron is caught between US export controls and Chinese demand. Washington has restricted what advanced equipment they can ship to China, and Beijing has retaliated by accelerating domestic alternatives. Any tightening of these rules cuts off a meaningful revenue stream. The company is Japanese, so any geopolitical escalation in the region creates unique risk.

Tokyo Electron primarily trades on the Tokyo Stock Exchange, and the ADR shares listed in the US can have lower trading volume and wider spreads. Currency moves between the dollar and yen also affect returns regardless of how the underlying business performs. This is a true international play, so volatility can come from places that have nothing to do with chips.