Japan's Towa Soars On AI Chip Demand From Obscurity To Nearly 400% Gains

The surging demand for artificial intelligence (AI) has resulted in a 390% stock price increase for Towa Corp., a Japanese firm critical to the chipmaking process.

What Happened: According to Bloomberg, Towa Corp.’s stock price has increased almost fivefold over the past year, largely due to the AI-driven demand for high-bandwidth memory.

According to TechInsights, the Kyoto-based company dominates two-thirds of the global chip molding equipment market. This equipment is essential for encasing chip dies and wires with resin, which safeguards them from environmental factors and enables safe stacking, enhancing graphics processors’ capabilities.

See Also: Jeff Bezos Convinced His Siblings To Invest $10K Each In His Online Startup Called Amazon — Here’s How Mu

Major clients such as SK Hynix, Samsung Electronics, and Micron Technology have been buying Towa’s compression molding tools, further expanding the company’s lead. “Our customers say that they can’t make high-end chips, especially for generative AI, without our technology,” Towa’s President Hirokazu Okada said as per the report.

Okada also disclosed that Towa is working on a new product that aims to halve the cost of molding and double processing speeds. The company anticipates commencing mass production of this new gear by 2028.

Why It Matters: The AI boom has been a significant driver of market trends, with Goldman Sachs predicting a 15% surge for the S&P 500 by the end of 2024 due to the exceptional performance of mega-cap tech stocks.

Similarly, Nvidia shares have seen significant growth fueled by the explosion of interest in AI. However, concerns have been raised about the energy requirements for AI development, with Sam Altman warning that an energy ‘breakthrough‘ is needed.

Read Next: Elon Musk’s X Could Be Next After TikTok, Says Former House Democrat: ‘Not At All A Stretch Of Imagination’

Image Via Shutterstock