Semiconductor-related businesses in Japan are enjoying robust earnings thanks to growth in demand associated with the global wave of digitalization.

Some logged record profits for their latest business years, while automakers in and outside the country are being forced to reduce vehicle output due to semiconductor shortages.

Major chipmaking gear-maker Tokyo Electron Ltd.’s consolidated operating profit for fiscal 2020, which ended in March this year, jumped 35.1% from the previous year to hit a record ¥320.6 billion.

“The level of investment is rising further for all kind of applications,” Tokyo Electron President and CEO Toshiki Kawai said. The company expects to post a record operating profit also for fiscal 2021.

Renesas Electronics Corp., a major producer of automotive semiconductors, saw its consolidated operating profit for calendar 2020 shoot up 10.4-fold to ¥65.1 billion. In January-March this year, the company’s operating profit hit a record high for the first quarter.

Semiconductors “are consumed as soon as they are made,” as automobile production is recovering rapidly thanks to a pickup in the U.S. and Chinese economies, said Renesas Electronics President and CEO Hidetoshi Shibata.

For fiscal 2020, chipmaker Kioxia Holdings Corp. posted an operating profit of ¥6.6 billion against a year-before loss.

At chip-related testing equipment-maker Advantest Corp., operating profit for fiscal 2020 soared 20.5% to ¥70.7 billion.

The automobile industry faces semiconductor shortages as chip demand is soaring for use at data centers and 5G ultrafast wireless communications networks following the spread of working from home amid the novel coronavirus pandemic.

Toshihiro Suzuki, president at Suzuki Motor Corp., and other auto industry officials predict that the chronic shortages of semiconductors will continue.

Meanwhile, the U.S.-China trade friction is casting a shadow over the future course of chip-linked companies.

Sony Group Corp., which makes image sensors, saw its semiconductor-related segment’s operating profit for fiscal 2020 fall 38.1% to ¥145.9 billion after suspending shipments of products for China’s Huawei Technologies Co.

On the global chip market, Akira Minamikawa, a senior official at British research company Omdia, said, “Moves toward decarbonization will also spur the expansion of demand.”

The demand will grow further in the second half of 2021 in line with progress with vehicle electrification and home and office upgrading, both related to decarbonization, according to Minamikawa.

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