Kokusai Electric Corp, a Japanese chip machinery maker, is hiring in China in a move to extend the 66% rally in stock prices it saw after its IPO in October, reports Bloomberg.
The anticipated growth in China comes down, in part, to the USA enforcing tighter export regulations on domestic chip manufacturers exporting to China. Kokusai Electric Corporation manufactures and distributes semiconductor manufacturing systems.
“Countless small-scale fabrication plants are springing up like mushrooms in China,” said Kokusai’s CEO Fumiyuki Kanai, in an interview with Bloomberg. “The Chinese government is providing aggressive support to the industry for activities including the internet-of-things, smartphones, and personal computers, ” he continued.
Kanai, who handled the Tokyo-based company’s IPO, believes that China holds continued value for Kokusai and that increasing the company’s support staff there will better serve clients. He also said that after investments for production and next-generation tool development, he will focus on shareholder returns, and will actively consider stock buybacks.
The Chinese chip market
“We have locations in China only to provide after-sale services and have no plans to do production or research there,” Kanai said. “We will increase personnel to cover the local demand.”
The Chinese market accounts for 40% of the chip gear maker’s revenue, with the expectation that this will rise to 50% in the near future.
As a result of strict export regulations from the USA, Chinese chip equipment producers were witnessing a surge in sales. However, more recent news suggests that the market may not be as stable as it appeared, with over 22,000 chip-related firms shutting their doors in 2023. This is in part due to a decline in demand caused by market changes due to Covid.
The most at-risk companies are the smallest ones which struggle to secure investments, and with their established position in the market, Kokusai is likely hoping to absorb some of the demand released by closing competitors. Kanai also stated that the company is looking to diversify into areas that complement its current range.
Featured image: RF._.studio/Pexels
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