(Bloomberg) -- Sales of Japanese chipmaking tools is expected to rise 15% in the year to March 2025, thanks to an AI-fueled recovery in spending on memory capacity, an industry group said.

The Semiconductor Equipment Association of Japan lifted its annual outlook to ¥4.25 trillion ($26 billion), up from a previous forecast of ¥4.03 trillion. Increased investment by logic foundries is expected to boost sales another 10% in the year to March 2026 to ¥4.68 trillion, it said, with sales seen rising further to ¥5.15 trillion in the year ending March 2027. 

Growing demand for artificial intelligence-enabling chips and data centers is boosting chip investment. SK Hynix Inc. plans to invest $75 billion through 2028, mainly to meet demand for high-bandwidth memory to support Nvidia Corp.’s AI accelerators. Samsung Electronics Co. also seeks to catch up in producing such memory.

AI-related investment and a boost in spending in China were behind the outlook hike, Tokyo Electron Ltd. President and SEAJ Chairman Toshiki Kawai told reporters on Thursday. 

Rising geopolitical tensions continue to weigh on the industry, however. The US is asking Japan and the Netherlands to add more limits on equipment it supplies China’s semiconductor sector.

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