In artificial intelligence (AI) and semiconductor technology, Japan is up there with other countries leading the charge, with companies like Towa Corporation a prime example. The AI-driven demand for high-bandwidth memory and advanced chip technologies has seen Towa’s shares surge by an impressive 400 percent. This surge is not just a reflection of market dynamics but a testament to Japan’s growing influence in the global AI and semiconductor industries. Hirokazu Okada, the CEO of Towa, shared his insights with Bloomberg on how the company plans to cement its leadership in the sector.
Towa’s success can be largely attributed to its control over an essential part of the chipmaking process: chip sealing. There are two primary methods of sealing: transfer and compression molding, with the latter being critical for high-end chips. Towa has been at the forefront of this technology, developing the first model of compression molding technology in 2009. As Okada puts it: “We are in charge of the chip sealing process. And we developed the first model of this technology in 2009. Even after six years, we see no competitors in this technology.”
The company’s strategic focus on high-end, specialized products has allowed it to dominate the market. Towa currently creates about 60% of the world’s chip sealing machines, a dominance they plan to maintain by focusing on the high-end market.
“If we want to make money, we need to focus on the high-end market where there’s no competition. We should specialize in this area and expand these markets,” said Okada. This approach has enabled Towa to not just survive but thrive amid the emergence of low-priced competitors, particularly from China.
Okada is keenly aware of the importance of innovation and specialization in sustaining Towa’s growth and market position. The company’s vision for the future includes achieving ¥100 billion in sales by 2032, with plans already in motion to increase production capacity to meet this goal. The recent surge in Towa’s share price is seen as a boon, making it easier for the company to invest towards achieving its ambitious sales target.
“A rise in the stock price equals a large increase in market capitalization. We need to make a considerable investment in order to achieve our next dream of ¥100 billion in sales,” he reflected on the company’s financial strategy.
Furthermore, Towa’s strategic considerations extend beyond just production and sales. The company is looking at mergers and acquisitions (M&A) as a way to bolster its market position, with a focus on creating win-win situations. Okada’s perspective on future M&As emphasizes the importance of mutual benefits, stating,
“If both parties do not achieve a win-win situation, it cannot be an M&A in the true sense in any opportunity in the future,” said Okada.
At the core of Towa’s strategy and Japan’s broader ambition in the AI and semiconductor space is the emphasis on innovation and the development of products that are unmatched by competitors.
“I believe that the basis of a manufacturing company is to develop products that are unrivaled by other companies, products that will surprise other companies and products that will please customers,” Okada concluded, calling attention to the foundation upon which Japan’s technological advancements continue to build.
Towa’s journey is a shining example of how strategic focus, innovation, and a commitment to quality can drive a company to global leadership in the competitive AI and semiconductor markets. As Japan continues to push the boundaries of technology, companies like Towa are not just contributing to the country’s economic growth but also shaping the future of global technology trends.
