Japan’s export restrictions threaten to marginalize Nikon in top litho segment

Export restrictions announced by Japan’s Trade Ministry do not bode well for Nikon’s immersion scanner business.

René Raaijmakers, Paul van Gerven

Presenting its third-quarter results earlier this year, Nikon hinted that it’s losing Intel as a customer. “In the past, more than 80 percent of sales of our ArF lithography systems were concentrated at one core North American customer,” a Q&A transcript published by the Japanese company reads.

Nikon expects to install 13 ArF systems at customers this fiscal year, without specifying the share of dry and immersion. Overall, it sold 9 new and 14 used lithography machines in the first three quarters. Together with 37 litho systems for flat screens, these represent a total value of 1.12 billion euros (162.9 billion yen).

Nikon says it’s suffering from “weakness in the semiconductor market.” As a result, shipments of lithography systems have been postponed to the next fiscal year. Some customers may wish to push installations even further down the road, the company warned.

The NSR-S636E is Nikon’s top-of-the-line ArF immersion scanner. Credit: Nikon

This fiscal year, more than half of Nikon’s sales are expected to go to companies other than its “North American core customer.” Through diversification of its customer base into Japan and other parts of Asia, Nikon wants to set up a stable base for its Precision Equipment Business in the next fiscal year and beyond.

However, it’s clear that “other parts of Asia” refers almost entirely to China. For that country, Japan’s Trade Ministry expects to introduce export restrictions for semiconductor manufacturing equipment in July, Nippon reports. The proposal compels Japanese companies in the sector to seek approval from the Trade Minister to export 23 items.

Formally, Japan’s semiconductor equipment manufacturers will need permission to export to any country, but in light of the recent lobbying efforts by the US, few would question that the measures are primarily aimed at China. The Netherlands has already announced similar curbs, although, like Japan, it hasn’t published concrete measures yet.

If the restrictions come into effect, it will certainly affect Nikon’s immersion business, which, combined with the demise of Intel, risks becoming insignificant. A Nikon spokesman told Reuters that sales of two instruments are likely to be affected. Nikon currently offers two types of immersion systems.