advantest dethrones tokyo electron: a $68 billion shift in chip leadership
tokyo, Friday, 12 September 2025.
Advantest, a Japanese chip testing equipment manufacturer, now boasts a market capitalization exceeding $68 billion. This milestone marks the first time since 2006 that it has surpassed Tokyo Electron. The surge is largely thanks to the U.S. Chips Act. Advantest’s stock has soared over 50% this year, dwarfing the performance of the TOPIX index. This shift indicates a major power realignment within Japan’s semiconductor equipment sector.
ai demand fuels growth
Advantest’s rise to the top is largely fueled by expectations of earnings growth driven by artificial intelligence (AI) demand [4]. The company’s market capitalization reached ¥10 trillion ($68 billion) on September 10, 2025 [4]. This surge reflects investor confidence in Advantest’s ability to capitalize on the increasing need for AI-related chip testing equipment [6]. Maito Yamamoto, chief analyst at Nissay Asset Management, noted that strong performance from companies like Broadcom suggests increased investment in AI chips by tech giants such as Google, which will provide a tailwind for Advantest’s earnings [1].
stock performance and investor confidence
Advantest’s stock has demonstrated significant gains, with a year-to-date increase exceeding 50% [1]. This impressive performance far surpasses the gains of the TOPIX index [1]. Strong capital inflows further support Advantest’s stock value [1]. On September 11, 2025, the company recorded a net inflow of ¥17.34 billion, marking it as one of the stocks with the highest net buying amount [1]. Advantest’s stock boasts a total return of 967.12% over the past five years, reflecting long-term investor confidence in its market strategy [1].
technical innovation and market position
Advantest’s market position is strengthened by its technological innovations [1]. The company recently launched the new generation CD-SEM E3660 [1]. This product aims to meet the stringent requirements for manufacturing 2-nanometer advanced node semiconductors, reinforcing the company’s presence in the measurement sector [1]. Furthermore, the company’s stock repurchase plan, slated for completion in mid-2025, has further bolstered investor confidence [1]. These strategic moves enhance investor sentiment and contribute to the company’s strong market valuation.
valuation and potential risks
Despite positive market sentiment, Advantest faces challenges associated with its high valuation [1]. The stock price, exceeding ¥14,000, is trading at a premium compared to the consensus target price of ¥11,562.11, suggesting it is overvalued [1]. A potential correction may occur if anticipated growth does not materialize [1]. Analysts project a modest annual revenue growth rate of 5.2% and an earnings growth rate of 6.9% [1]. Successfully achieving these growth targets, managing profit margin pressures, and navigating geopolitical uncertainties will be crucial factors influencing future stock performance [1].
tokyo electron’s challenges
Tokyo Electron faces challenges that have contributed to Advantest’s ascendancy [1]. Tokyo Electron’s AI-related sales constitute a relatively smaller portion of its overall revenue [1]. The company is also experiencing pressure from slowing investments by chip manufacturers in other countries, coupled with weakness in the automotive and industrial semiconductor markets [1]. These factors have impacted Tokyo Electron’s growth prospects compared to Advantest, which is heavily benefiting from the surge in AI-driven demand for testing equipment [4].