Canon Opens Its First Lithography Factory, Starts in September

On July 30, Canon unveiled a new semiconductor equipment factory, marking its first such facility in over two decades. Located in Utsunomiya, north of Tokyo, this expanded production center aims to capture growth in the chip industry driven by the AI boom.

The new plant, set to begin production in September, will focus on semiconductor lithography systems — essential machines that print intricate circuit patterns onto wafers, a critical step in chip fabrication. With an investment of 50 billion yen (approximately $336 million), including both construction and equipment, the factory covers 67,518 square meters and is expected to boost Canon's production capacity by 50%.

Fujio Mitarai, Canon's Chairman and CEO, emphasized the significance of this factory: “The equipment produced here embodies the full strength of Canon's technological expertise and will play a key role in supporting the global semiconductor industry.”

Lithography machines are at the heart of chip manufacturing. They enable the creation of smaller line widths on circuits, which generally translates into better chip performance. While Dutch company ASML dominates this market with over 90% share and is the sole provider of advanced extreme ultraviolet (EUV) lithography systems, Canon once held a leading position along with Nikon. However, in the race to miniaturize chips, ASML pulled ahead, investing heavily in next-generation front-end lithography technologies.

Canon's new factory will focus on producing i-line and krypton fluoride (KrF) lithography machines. These systems are widely used for “mature node” chips, which remain critical for many applications despite being less cutting-edge than EUV. The plant will also produce nanoimprint lithography equipment — an emerging technology that stamps fine circuit patterns onto substrates, hinting at future advancements — though the initial output will primarily be mature lithography tools.

The renewed focus on mature node equipment is driven by the explosive growth of generative AI. AI chips require higher computational power, but traditional miniaturization is hitting physical limits. To meet performance demands, chipmakers increasingly integrate multiple semiconductor components like processors and memory into single modules. This packaging process, part of the chip's back-end manufacturing, requires a new “interposer layer” to connect the chips to the substrate.

Canon discovered that its lithography technologies, originally designed for front-end patterning, can effectively create these interposer wiring layers. Recognizing the limits of further miniaturization early on, Canon launched lithography equipment for back-end processes as far back as 2011.

Hiroaki Takeishi, Canon's Senior Executive Director, noted that back-end lithography systems now represent about 30% of the company's sales. “Canon provides lithography equipment for back-end processes used by nearly all major semiconductor manufacturers,” he said.

Canon aims to continuously improve its products based on customer feedback, targeting sales of 225 semiconductor lithography machines in 2025 — a 9% increase from recent years. Between 2015 and 2020, annual sales averaged around 90 units.

Taiwan's TSMC, the world's largest contract chipmaker, relies heavily on Canon's equipment for its back-end processes. While Canon currently holds a strong position in this segment, it will face fresh competition next year when Nikon enters the same market.