A Kyoto-based chipmaker that controls a minor but crucial element of the chipmaking process benefits from AI-driven demand for high-bandwidth memory.
Towa Corp. controls two-thirds of the chip molding equipment industry, according to TechInsights. Encasing chip die and wires in epoxy protects them from dust, moisture, and impact so they can be safely stacked to help graphics processors like Nvidia Corp. train artificial intelligence.
After rising 2.3%, the company's stock fell 1% Monday morning. Due to high-performance chip demand pushing complicated semiconductor designs, its shares are roughly five times what they were a year ago.
As SK Hynix Inc., Samsung Electronics Co., and Micron Technology Inc. buy Towa's compression molding tools, its lead is growing. Since summer, SK Hynix and Samsung have ordered 22 of these machines. Each machine costs over ¥300 million ($2 million), with some achieving over 50% gross profit margins.
“Our customers say they can't make high-end chips, especially for generative AI, without our technology,” President Hirokazu Okada stated via interview. He stated the company dominates high-end chip molding machinery. He stated “we’re just getting started” with high-bandwidth memory chip production starting next year.
Towa's new innovation aims to halve molding costs and double processing speeds. He added the new machine is virtually finished and clients would soon be able to test its capabilities, with mass production starting in 2028. The Towa patent method of dipping chip dies in resin uses less material and generates thinner chip packages than pouring the compound on. It also reduces faults, the business stated.
The company, founded in 1979 on Kyoto's outskirts, created chip sealant methods used today. Due to the increased expense of packing more transistors into silicon slivers, its competence in vacuum sealing thin wires without air bubbles is becoming more important. Towa is the only compression molding company, competing with Nagano-based Apic Yamada Corp. and Singapore's ASMPT Group.
Mitsuhiro Osawa of Ichiyoshi Research Institute said other businesses have tried to create competitive technology, but Towa possesses the crucial patents and deep customer links. He said, “It's like there's no way to imitate them.”
Okada's workstation has perfectly placed pens and papers. The Towa CEO says he must fix paintings in clients' offices if they are even a millimeter off. He stated the 2,000-person company's manufacturing culture emphasizes detail.
Towa plans to double its annual revenue to ¥10 billion by 2032. The company is exploring boosting capacity to produce ¥75 billion more revenue, according to the 72-year-old veteran who succeeded founder Kazuhiko Bando in 2012. “We’re not interested in markets where we have to cut prices to compete,” Okada added. “We want to offer technologies whose benefits outweigh our cost.”
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