One of the beneficiaries of the boom in demand for high-bandwidth memory driven by artificial intelligence is a Kyoto-based company that controlschipA small but crucial part of the manufacturing process.
Donghe has two-thirds of the global market for chip molding equipment, according to research firm TechInsights. This is a critical step in encapsulating chip dies and wires with resin, protecting them from dust, moisture and shock so they can be safely stacked on top of each other, giving graphics processors such as Nvidia Corp. more power to better train artificial intelligence.
The company's shares, which have nearly quintupled from a year ago as demand for high-performance chips drives increasingly complex semiconductor designs, rose as much as $2.31 before giving up gains and were down $11 on Monday morning.
Now, Tohwa's lead is expanding as customers such as SK Hynix Inc., Samsung Electronics Co. and Micron Technology Inc. buy the Japanese maker's compression molding tools. SK Hynix and Samsung have ordered a total of 22 such machines since last summer. Each machine costs about 300 million yen ($2 million), and some have gross margins exceeding 50%.
“Our customers say they can’t make high-end chips, especially generative AI chips, without our technology,” President Hirokazu Okada said in an interview. He said the company has almost all of the expertise in high-end chip-forming machinery.100%market share and expects to launch full-scale production of high-bandwidth memory chips next year.
Towa is also preparing its next product, which is designed to halve molding costs and double processing speeds. He said the development of the new machine is basically complete and customers will soon be able to test its capabilities, and mass production of such gears will begin in 2028.
Towa holds a patent covering a technique for dipping chip die in resin that uses less material and produces thinner chip packages than potting compounds. The company says it also produces fewer defects.
Founded in 1979 on the outskirts of Kyoto, the company invented the landmark chip encapsulant technology widely used today. Its expertise in creating a vacuum seal around fine wires without creating bubbles has become increasingly important as the cost of cramming more transistors onto silicon wafers continues to rise.