tokyo electron's forecast cut sends nikkei tumbling
tokyo, Friday, 1 August 2025.
tokyo’s stock exchange faced a downturn. The Nikkei average fell. This drop followed Tokyo Electron’s revised earnings forecast for the fiscal year ending march 2026. Semiconductor stocks experienced a sharp decline. Tokyo Electron’s lowered expectations triggered a sell-off. The negative trend impacted other high-priced semiconductor stocks. South Korea’s kospi also saw a significant drop. This mirrored the decline of the philadelphia semiconductor index in the u.s. Tokyo Electron’s stock hit a limit-down, dragging down the entire market.
nikkei average decline
The Nikkei Stock Average on the Tokyo Stock Exchange experienced a setback, closing at 40,799.60 yen, a decrease of 270.22 yen or 0.66% from the previous day [1]. At one point, the decline exceeded 480 yen [1]. This downturn was largely attributed to sell-offs in semiconductor-related stocks, triggered by Tokyo Electron’s downward revision of its earnings forecast for the fiscal year ending March 2026 [1]. The negative sentiment was compounded by the decline in U.S. stock prices the previous day [1].
tokyo electron’s revised forecast
Tokyo Electron’s revised forecast significantly impacted the Nikkei average [1]. The company anticipates a consolidated net profit of 444 billion yen for the fiscal year ending March 2026, an 18% decrease compared to the previous year [1][6]. This represents a downward revision of 122 billion yen from the previous forecast, which had projected a 4% increase [6]. This adjustment reflects expectations of sluggish demand for manufacturing equipment in the second half of the year, as some semiconductor manufacturers adjust their capital investment plans [1][6].
market reaction and investor sentiment
Tokyo Electron’s stock price plummeted to the lowest possible limit, exerting downward pressure on the overall market [1]. The company’s revised forecast poured cold water on investors anticipating an earnings-driven market rally [2]. Masuzawa Takehiko, head of trading at Phillip Securities, noted that cautious investors were prevalent, recalling the historic stock decline triggered by the U.S. employment statistics announcement on august 5, 2024 [1]. The market was also influenced by anticipation of the U.S. employment statistics for july [1].
yen’s depreciation offers limited support
The yen’s depreciation to the upper 150 yen range against the dollar, a four-month low, provided limited support to the stock market [1]. This movement followed Bank of Japan Governor Kazuo Ueda’s remarks on july 31, 2025, suggesting a cautious approach to additional interest rate hikes, which fueled yen selling [1]. Some automobile stocks, including Toyota and Suzuki, saw buying interest due to expectations of improved profitability from the weaker yen [1]. However, the decline in semiconductor-related stocks overshadowed these gains [1].
broader market trends
The tokyo stock price index (topix) managed a slight gain, rising 0.19% to close at 2,948.65 [1]. Conversely, the jpx prime 150 index fell by 0.23%, closing at 1,278.25 [1]. Trading volume on the tokyo prime market amounted to 5.6149 trillion yen, with 2.219 billion shares traded [1]. Declining stocks numbered 291, while advancing stocks reached 1,300, with 32 remaining unchanged [1]. The tokyo growth market 250 index, which tracks emerging stocks, continued its upward trend, closing 0.26% higher at 762.27, driven by individual investors with increased investment capacity [3].
tokyo electron’s financial performance
Tokyo Electron’s first quarter results for fiscal year 2026 showed sales of 549.5 billion yen and an operating income of 144.6 billion yen, resulting in an operating margin of 26.3% [5]. While the company maintained its first half outlook for fiscal year 2026, projecting sales of 1.15 trillion yen and operating income of 288 billion yen [5], the full-year forecast was adjusted downward [4][5]. The company now anticipates a 5% decrease in wafer fab equipment (wfe) growth for calendar year 2025 [5].
stocks affected
SoftBank Group and Advantest experienced declines, while Lasertec, Disco, and Screen also faced downward pressure [1]. Hoya and Hitachi were also sold off [1]. Konami Group saw a significant increase [1]. Fast Retailing, KDDI, and JT experienced gains [1]. Fanuc and Fuji Electric were bought [1]. Tokyo Electron’s stock experienced a significant drop of 84.731%, reflecting investor concerns over the revised forecast [7].