Tokyo Electron is on course to widen its lead against Chinese chip tool makers despite the billions of dollars Beijing is mobilizing to catch up, according to the Japanese company¡¯s chief.

Toshiki Kawai shrugged off concerns about rising competition from China, adding that investors haven¡¯t adequately priced in Tokyo Electron¡¯s leadership in making machines that help process silicon into artificial intelligence chips. Technology at the Japanese company, whose main competitor is Applied Materials, is advancing at a pace that¡¯s faster than its Chinese rivals¡¯, due in part to close collaboration with contract chipmakers, the chief executive officer said.

¡°We have access to cutting-edge wafers, and our ability to provide cutting-edge process technology will become overwhelmingly faster than Chinese makers,¡± Kawai said in an interview. ¡°Because we have such a strong lineup of products, Tokyo Electron can be in alignment with a technology roadmap that spans 10 years alongside the world¡¯s leading device makers.¡±

That roadmap covers roughly four generations of chip processing technology and represents significant potential for further growth as the pace of innovation accelerates, he said. ¡°The gap will continue to widen.¡±

Kawai¡¯s confidence is in the face of a national push in China to work around U.S.-led export restrictions on chipmaking knowhow. China¡¯s Advanced Micro-Fabrication Equipment, Naura Technology Group and Shanghai Micro Electronics Equipment Group are spending heavily to develop cutting-edge chip equipment. That¡¯s while customers like Semiconductor Manufacturing International and Hua Hong Semiconductor have been buoyed by pressure from Beijing on its tech sector to source more chips from domestic manufacturers.

To maintain its leadership, Tokyo Electron plans to invest ?1.5 trillion ($10.5 billion) in research and development and hire 10,000 engineers over the next five years ¡ª or about 2,000 every year ¡ª to bring up the total number of employees to more than 30,000. More than 25,000 college graduates applied for 500 positions this year.

The company¡¯s shares remain weighed down by fears about rising competition and its exposure to China, however.

A series of U.S.-led measures to limit China¡¯s ability to obtain chip gear and services are making investors fearful that the Tokyo company ¡ª which earned almost half of its revenue in China at one point last year ¡ª may suddenly be forced to halt its business with Chinese customers, Bloomberg Intelligence analyst Masahiro Wakasugi said. Tokyo Electron¡¯s shares are down around 25% from a year ago.

¡°We are not at all satisfied with our current market cap,¡± Kawai said, adding that the company targets a dividend payout ratio at more than 50% and plans to implement flexible share buybacks. Tokyo Electron was among the top five most valuable companies on the Tokyo Stock Exchange during most of April...