Q1 2025 Tokyo Electron Ltd Earnings Call

<unk> much for joining us today, despite your busy schedule.

Unknown Executive: Thank you very much for joining us today despite your busy schedule.

Unknown Executive: Thank you very much for joining us today, despite your busy schedule.

Speaker Change: I'm <unk> of IR Department, serving as the moderator of today's session.

Kenji Yasui: I am Yasuda of IR department serving as a moderator of today's session.

Kenji Yasui: I am Yasuda of IR department serving as a moderator of today's session.

Speaker Change: I would like to introduce today's attendees to.

Toshiki Kawai: I would like to introduce today's attendees, Toshiki Kawai, Representative Director President CEO, I am Kawai.

Toshiki Kawai: I would like to introduce today's attendees, Toshiki Kawai, Representative Director, President, CEO. I am Kawai.

Colorado: <unk> representative director, President and CEO I am Colorado.

Colorado: Next.

Colorado: Hiroshi <unk> senior Vice President and General Manager Division, Knoxville, Finance Division I am come on multiple.

Hiroshi Kawamoto: Next, Hiroshi Kawamoto, Senior Vice President and General Manager Division Office of Finance Division, I am Kawamoto. Prior to the presentations, let me explain the flow of today's session. First of all, Kawamoto and Kawai will make presentations. After that until 6.30, you will have a question answer session, really interesting questions from the audience. This meeting uses two channels of WebEx for the simultaneous interpretation between Japanese and English. As we explained, in our email, you will kindly request it to use absentee, PC or mobile terminal if you plan task questions, but if you are not going to ask any questions, you can use telephones.

Hiroshi Kawamoto: Next, Hiroshi Kawamoto, Senior Vice President and General Manager, Division Office of Finance Division, I am Kawamoto.

Colorado: Yeah.

Speaker Change: Prior to the presentation, let me explain the flow of today's session.

Unknown Executive: Prior to the presentations, let me explain the flow of today's session.

Speaker Change: First of all color model and Carlyle will make presentations.

Unknown Executive: First of all, Kawamoto and Kawai will make presentations. After that, until 6:30, you will have a question-and-answer session, really interesting questions from the audience.

Speaker Change: After that until 630, Japan time, who will have a question answer session really interesting questions from the audience. This meeting here just two channels with Webex for December two nutrient application between Japanese and English as we explained in our E. Mail you are kindly requested to use option T. D C. While mobile terminal if you <unk>.

Unknown Executive: This meeting uses two channels of WebEx for the simultaneous interpretation between Japanese and English. As we explained, in our email, you will kindly request it to use absentee, PC or mobile terminal if you plan task questions, but if you are not going to ask any questions, you can use telephones.

Speaker Change: <unk> desk questions, but if you are not going to ask any questions you can use telephones.

Speaker Change: Since this conference is intended to institutional investors and analyst.

Unknown Executive: Since this conference is intended for institutional investors and analysts, we would appreciate your understanding that we receive questions only from institutional investors and analysts. We will post the audio contents of this conference in Japanese and English on our website within a couple of days. It would be appreciated if you could also visit our VISTA.

Unknown Executive: Since this conference is intended for institutional investors and analysts, we would appreciate your understanding that we receive questions only from institutional investors and analysts.

Speaker Change: You shipped your understanding that we receive questions only from institutional investors and analyst.

Speaker Change: We will post the audio contents of this conference in Japanese and English on our website within a couple of days it would be appreciated.

Unknown Executive: We will post the audio contents of this conference in Japanese and English on our website within a couple of days. It would be appreciated if you could also visit our VISTA.

Speaker Change: We'll show a visit our Vista no.

Speaker Change: Mr <unk> will present.

Hiroshi Kawamoto: Now, Mr. Kawamoto will present the consolidated financial summary. Mr. Kawamoto, please.

Hiroshi Kawamoto: Now, Mr. Kawamoto will present the consolidated financial summary.

Speaker Change: Consolidated financial summary, Mr. Kawamoto. Please.

Hiroshi Kawamoto: Mr. Kawamoto, please. Once again, good afternoon. I am Kawamoto Finance Division. I'd like to present the consolidated financial summary of the first quarter of fiscal year ending March 2021. This slide shows core three financial summary. In the first quarter, I would like you to refer to the figures in the blue box. In the first quarter, we generated net sales of 555.0 billion yen, a 1.4% increase from the paid quarter. This profit was 264.0 billion yen, a 3.1% increase from the paid quarter. This profit margin was 47.6%, 0.8% increase due to the improvement of products and options of one of factors, such as processing industry.

Speaker Change: Once again, good afternoon, I am Kawamoto finance, David Jin I'd like to present, the consolidated financial summary of the first quarter of fiscal year ending March 2025. This slide shows quarterly financial summary.

Hiroshi Kawamoto: Once again, good afternoon. I am Kawamoto Finance Division.

Hiroshi Kawamoto: I'd like to present the consolidated financial summary of the first quarter of fiscal year ending March 2021. This slide shows core three financial summary. In the first quarter, I would like you to refer to the figures in the blue box. In the first quarter, we generated net sales of 555.0 billion yen, 1.4% increase from the paid quarter. This profit was 264.0 billion yen, 3.1% increase from the paid quarter. This profit margin was 47.6%, 0.8% increase due to the improvement of products and options of one of factors, such as processing industry.

Speaker Change: In the first quarter.

Speaker Change: I would like you to refer to.

Speaker Change: He is in the Blue box in the first quarter, we generated net sales of 555 point it'll be union, one 4% increase from the page quarter. This book debt was $264 two there'll be union three 1% increase from the previous quarter Rich spoke at margin was 47, 6%.

Speaker Change: <unk> eight percentage point increase due to the improvement of product mix and absence of one off factors such as processing inventory.

Speaker Change: Operating income was $165 7 billion yen 14, 1% increase from the previous quarter.

Hiroshi Kawamoto: Operating income was 165.7 billion yen, 4.1% increase from the paid quarter. Operating margin was 29.9%, raised by 3.4% increase from paid quarter, due to the increase of cost profit margin and decline of issue energy sales ratio, including other expenses, as I said earlier. Income before income taxes increased by 5.9% to 167.2 billion yen, net income was not revutable to owners of parent, was 126.1 billion yen, 1.0% increase from the paid quarter.

Hiroshi Kawamoto: Operating income was 165.7 billion yen, a 4.1% increase from the paid quarter. Operating margin was 29.9%, raised by 3.4% increase from paid quarter, due to the increase of cost profit margin and decline of issue energy sales ratio, including other expenses, as I said earlier. Income before income taxes increased by 5.9% to 167.2 billion yen; net income was not revutable to owners of parent, was 126.1 billion yen, 1.0% increase from the paid quarter. This is a graphic representation of the financial summary shown on the British page on a chronological basis. You can see that both net sales and profit margins are improving gradually.

Speaker Change: Operating margin was 29, 9% raised by three full percentage points from previous quarter due to the increase of gross profit margin and decline of SG&A to sales ratio, including R&D expenses as I said earlier.

Speaker Change: Income before income taxes increased by five 9% to $167 2 billion yen.

Speaker Change: Net income attributable to owners of parent was $126 1 billion, 1% increase from the previous quarter.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: This is a graphic represented the presentation of the financial summary, as shown on the previous page on a chronological basis you can see that both net sales and profit margins are improving gradually.

Hiroshi Kawamoto: This is a graphic representation of the financial summary shown on the British page on the chronological basis. You can see that both net sales and profit margins are improving gradually. This in the first quarter, from the bottom of the chart, sales to non-memory customers accounted for 76 2% non-voted by memory accounted for 2% and D1 accounted for 26% compared to the previous quarter, net sales and proportion of D1 and non-voted by memory declined while those of non-memories rose.

Speaker Change: This slide shows us being new equipment satisfy application.

Speaker Change: In the past quarter from the bottom of this chart sales to non memory customers.

Hiroshi Kawamoto: This in the first quarter, from the bottom of the chart, sales to non-memory customers accounted for 76.2%; non-voted by memory accounted for 2%; and D1 accounted for 26%. Compared to the previous quarter, net sales and proportion of D1 and non-voted by memory declined, while those of non-memories rose. This slide shows net sales by region. As for net sales composition in the past quarter, as I've described in the previous slide of sales composition by application, non-memory sales rose mainly, and regarding the composition proportion of D1 rose in particular, and also North America and China produced from the previous quarter.

Speaker Change: It was 72% knowing what our di mentally accounted for 2% empty when accounted for 26% compared with the previous quarter net sales some proportion of DRAM and non volatile memory declined while those have no mental these wounds.

Speaker Change: This slide shows net sales by region.

Hiroshi Kawamoto: This slide shows net sales by region. As for net sales composition in the past quarter, as I've described in the previous slide of sales composition by application, non-memory sales rose mainly and regarding the composition proportion of D1 rose in particular and also North America and China produced from the previous quarter.

Speaker Change: Absolute net seller composition in the past quarter as I've just drive it into pay this slide of sales competition by application no memory sales suppose Mandy and regarding the competition proportion of Taiwan. Those in particular, and also North America, and China and produced from the previous quarter.

Speaker Change: This slide shows the solution sales.

Hiroshi Kawamoto: This slide shows the future solution sales. In the first quarter, field solution sales was 118.1 billion yen declining by 1.2 billion yen, mainly use equipment modification sales degrees while sales of parts and services rose along with improvement of utilization rate in the customer's parts.

Hiroshi Kawamoto: This slide shows the future solution sales. In the first quarter, field solution sales was 118.1 billion yen, declining by 1.2 billion yen, mainly use equipment modification sales degrees, while sales of parts and services rose along with improvement of utilization rate in the customer's parts. This slide shows the balance sheet. Total assets were 23495.5 billion yen; cash and cash equivalent were 438.5 billion yen, declining by 34.0 billion yen from the previous quarter due to the payment of dividend to the shareholders, tax payment, and share repurchase. Notes in the accounts receivable were 358.8 billion yen, declining by 32.5 billion yen quarter quarter.

Speaker Change: In the past quarter fueled solutions sales were $118 1 billion declining by $1 2 billion yen, mainly use equipment modification sales, while sales of parts and services rose along with improvements that utilization rate in the customer fabs.

Speaker Change: This slide shows the balance sheet.

Hiroshi Kawamoto: This slide shows the balance sheet. Total assets were 23495.5 billion yen, cash and cash equivalent were 438.5 billion yen declining by 34.0 billion yen from the previous quarter due to the payment of dividend to the shareholders tax payment and share repurchase. Notes in the accounts receivable were 358.8 billion yen declining by 32.5 billion yen quarter quarter. In the entries were 764.8 billion yen, investment and other assets amounted to 471.4 billion yen growing by 85.2 billion yen from the previous quarter because of such factors that the increased market value of share they own.

Speaker Change: Total assets were two three and $495 5 billion yen.

Speaker Change: Cash and cash equivalents were $438 5 billion declining by 34.

Speaker Change: Zero billion yen from the beat this quarter due to the payment of dividend to the shareholders that speeding and share repurchase notes and accounts receivable were $358 8 billion yen declining by $32 5 billion yen quarter call for quarter inventories were $764 8 billion yen.

Hiroshi Kawamoto: In the entries were 764.8 billion yen, investment and other assets amounted to 471.4 billion yen, growing by 85.2 billion yen from the previous quarter because of such factors that the increased market value of share they own. Full availability is a net sales shown on the right-hand side. Liability is about 722.4 billion yen, increasing by 26.1 billion yen. Net assets were 1 trillion 773.0 billion yen, increasing by 12.8 billion yen from the previous quarter. This change is primarily attributed to the combination net sales increase, as well as assets due to dividend payment to the shareholders and share repurchase. The equity ratio was 70.3 percent.

Speaker Change: Investment and other assets amounted to $471 4 billion growing by $85 2 billion from the previous quarter because of such factors are increased market value of shares we own for the liabilities. Our net sales shown on the vet can find liabilities was $722 4 billion.

Hiroshi Kawamoto: Full availability is a net sales shown on the right-hand side. Liability is about 722.4 billion yen increasing by 26.1 billion yen. Net assets were 1 trillion 773.0 billion yen increasing by 12.8 billion yen from the previous quarter. This change is primarily attributed to the combination net sales increase, as well as assets due to dividend payment to the shareholders and share repurchase, the equity ratio was 70.3 percent.

Speaker Change: <unk> by $26 1 billion yen net assets were one <unk> 773 point it'll be doing increasing by $12 8 billion from the previous quarter. This change is primarily attributed to the combination sales increase as well as assets B piece.

Speaker Change: Due to dividend payment to the shareholders is share repurchase the equity ratio was 73%.

Speaker Change: This slide shows the cash flow.

Hiroshi Kawamoto: This slide shows the cash flow. The cash flow operating activities in the fast quarter was 183.7 billion yen. The cash outflow from investing activities was 27.8 billion yen. The cash outflow from financing activities was 194.4 billion yen due to the share repurchase of 79.9 billion yen. The free cash flow was 156.4 billion yen. We maintain the constant level.

Hiroshi Kawamoto: This slide shows the cash flow. The cash flow operating activities in the fast quarter was 183.7 billion yen. The cash outflow from investing activities was 27.8 billion yen. The cash outflow from financing activities was 194.4 billion yen due to the share repurchase of 79.9 billion yen. The free cash flow was 156.4 billion yen. We maintain the constant level. Finally, I will present the updates of the share repurchase. As you can see, the share repurchase based on the resolution of quoted directors on major trends was completed as of June 30, 2024. The total number of shares purchased from May to the end of June 24, amounted to 317,000 shares.

The cash flow operating activities in the past quarter was $183 7 billion yen.

Speaker Change: Okay.

The cash outflow from investing activities was $27 3 billion yen.

Speaker Change: Cash outflows from financing activities was $194 4 billion due to the share repurchase of $79 nine getting yen.

Speaker Change: The free cash flow was $156 4 billion yen.

Speaker Change: We maintained a constant level finally, I will present, the update of the share repurchase.

Hiroshi Kawamoto: Finally, I will present the updates of the share repurchase. As you can see, the share repurchase based on the resolution of quoted directors on major trends was completed as of June 30, 2024. The total number of shares purchased from May to the end of June 24, amounted to 317,000 shares. The total cost of share repurchase was 79.9 billion yen.

Speaker Change: As you can see the share repurchase based on the resolution of board of directors on major change was completed as of June 32024. The total number of shares purchased will make to the end of June 24 amounted to 2 million 307 <unk> thousand.

Speaker Change: Shared total cost of share repurchase of $79 9 billion yen. This concludes my presentation on the consolidated financial summary of the first quarter of fiscal 2025 now let's move on Mr. Hawaii will.

Hiroshi Kawamoto: The total cost of share repurchase was 79.9 billion yen.

Hiroshi Kawamoto: This concludes my presentation on the consolidated financial reform of fiscal 2025.

Hiroshi Kawamoto: This concludes my presentation on the consolidated financial reform of Fiscal 2025. Now let's move on.

Unknown Executive: Now let's move on.

Toshiki Kawai: Mr. Kawai will present business environment and financial estimates.

Toshiki Kawai: Mr. Kawai will present the business environment and financial estimates.

Speaker Change: Present business environment and financial estimates.

Good afternoon, I am call Ie, our present business environment in financial estimates.

Toshiki Kawai: Good afternoon, I am Kawaii. I will present business environment and financial estimates. Let me start with the business environment. In calendar 2024, WP market is growing in general, although some customers are changing their investment plans. At present, sterile investment for AI servers continues and utilization rate for PCs and smartphone applications is steadily recovering. Along with this trend, growing demands for DDR5 and HVN accelerates WFE spending for DRAMs. In advanced logic and pantry, data about the growing needs for transplant packaging and testing as well as for different entitlements.

Toshiki Kawai: Good afternoon, I am Kawaii. I will present business environment and financial estimates. Let me start with the business environment. In calendar 2024, WP market is growing in general, although some customers are changing their investment plans. At present, sterile investment for AI servers continues, and utilization rate for PCs and smartphone applications is steadily recovering. Along with this trend, growing demands for DDR5 and HVN accelerates WFE spending for DRAMs. In advanced logic and pantry, data about the growing needs for transplant packaging and testing as well as for different entitlements. In calendar 2025, in addition to the strong growth of AI servers, AI content in PCs and smartphones is expected to rise.

Let me start with the business environment.

Speaker Change: Is called into 2024 that if your market is growing in general although some customers are changing their investment plans.

Callie: At present Sterling <unk> for AI servers continues and utilization rate for Pcs and smartphones applications is steadily recovering.

Speaker Change: Along with the strength really demands for D. R. Five an HEB HV and accelerates Wi Fi spending for DRAM.

Speaker Change: In advanced logic, and foundry delta that the growing niche what funds packaging and testing <unk> for different end equipments.

Speaker Change: In calendar 2025 in addition to the strong growth of AI servers.

Toshiki Kawai: In calendar 2025, in addition to the strong growth of AI servers, AI content in PCs and smartphone is expected to rise. Following the recovery of investment for DRAM, investment for NAND is also expected to resume as the inventory adjustment proceed. Further recovery of WFE spending in advanced logic and pantry that expected to offset low investment for mature nodes. We expect those factors will drive double-visit growth in calendar 2025 WFE market. The leading edge semiconductor technologies are essential for AI applications toward the realization of semiconductor devices featuring knowledge, capacity, auto-high speed and low power consumption. The technology innovation is moving forward. Along with the technology evolution including GAA, backside PDN and HVN, tele-business opportunity will further expand.

Speaker Change: In Pcs and smartphones is expected design.

Following the recovery of investments for DRAM investment for NAND is also expected to resume as the inventory adjustment proceed.

Toshiki Kawai: Following the recovery of investment for DRAM, investment for NAND is also expected to resume as the inventory adjustment proceeds. Further recovery of WFE spending in advanced logic and pantry that is expected to offset low investment for mature nodes. We expect those factors will drive double-visit growth in calendar 2025 WFE market. The leading edge semiconductor technologies are essential for AI applications toward the realization of semiconductor devices featuring knowledge, capacity, auto-high speed, and low power consumption. The technology innovation is moving forward. Along with the technology evolution, including GAA, backside PDN, and HVN, tele-business opportunity will further expand.

Speaker Change: Further recovery of WP spending in advanced logic foundry this exit.

Speaker Change: Expected to offset low investment for mature nodes.

Speaker Change: We expect that those factors will drive double digit growth in calendar 2025, Wi Fi market.

Speaker Change: The leading edge semiconductor technologies essential for AI applications towards utilization of semiconductor devices, featuring large capacity at a high speed and low power consumption technology innovation is moving for it along with the technology.

Speaker Change: Technology, but <unk>, including <unk> and HBM tell us the business opportunity while further expense.

Speaker Change: This shows business progress in the first quarter of fiscal year ending March 2025.

Toshiki Kawai: This shows business progress in the fast quarter of fiscal year in the March 2025, of, Regarding the financial performance as Mr. Kawamoto presented earlier, both sales and profit exceeded our guidance. We succeeded in bringing PORs who are high-value-edit strategic products. We won development PORs in conduct the etching for DRAM and cleaning system for advanced logic. Also for cryogenic etching, which is one of our strategic products and wonders which I expected to grow further more, we are steadily proceeding with development and variation for their introduction into high-volume and fastening lines.

Toshiki Kawai: This shows business progress in the fast quarter of fiscal year in the March 2025. Of, regarding the financial performance as Mr. Kawamoto presented earlier, both sales and profit exceeded our guidance. We succeeded in bringing PORs who are high-value-edit strategic products. We won development PORs in conduct the etching for DRAM and cleaning system for advanced logic. Also for cryogenic etching, which is one of our strategic products and wonders which I expected to grow further more, we are steadily proceeding with development and variation for their introduction into high-volume and fastening lines. Addressing the rapid-glowing needs for advanced packaging and testing, we are receiving a wide range of inquiries for quota-developed tops etching, batch-film-the-position, bongers, and PORs, among others.

Speaker Change: Regarding the financial performance as Mister car Barometer presented earlier, both net sales and profit exceeded our guidance.

Speaker Change: We succeeded in winning <unk>, who are high value added strategies products.

We won't development <unk> in conductor etch for DRAM and cleaning system for advanced logic.

Speaker Change: Also for cryogenic itching, which is one of our strategic products and blenders, which I expect it to grow. Furthermore, we are steadily proceeding with development and validation for that introduction into high volume manufacturing line.

Adjusting the rapid growing needs for advanced packaging and testing, we are receiving wide range of inquiries for quarter. The lockbox itching batch film deposition blenders and <unk> among others.

Toshiki Kawai: Addressing the rapid-glowing needs for advanced packaging and testing, we are receiving wide range of inquiries for quota-developed tops etching, batch-film-the-position, bongers and PORs among others. In recent, on West in July, we released new products featuring leading etch technologies. The single Wepper Film Deposition System Exord series deploys a broad product portfolio to fulfill such needs as device skating, state-e-indexiation and diversification of deposition materials. Exord one effectively lowers contact resistance of metal interconnection in advanced logic.

Speaker Change: Anderson on West in July, we released new products, featuring leading edge technology.

Toshiki Kawai: In recent, on West in July, we released new products featuring leading etch technologies. The single Wepper Film Deposition System Exord series deploys a broad product portfolio to fulfill such needs as device skating, state-e-indexiation, and diversification of deposition materials. Exord one effectively lowers contact resistance of metal interconnection in advanced logic. Exord two is composed of two moves, namely dual match reactor and quadmatch reactor to deposit high-quality films with high throughput. Class cluster beams system, Acrevia, contributed to cost reduction in e-e-e-e-e-partening processes as it features well-damaged order-fine line with its formation and profile correction. We have already started developing these systems for multiple customers for their evaluation and expect that they will contribute to their achievement of fiscal 2027 sales and perfect goals in the mid-term management plan.

The single wafer deposition system episode series deploys, a broad product portfolio to fulfill such needs as device skating safety integration and diversification of deposition materials.

Speaker Change: Extra one effectively lloyds contact resistance of metal injection in advanced logic.

Speaker Change: It shows two is composed of two loans, mainly dual much reactor and quite much we have done to the posted high quality films with highest throughput discuss cluster beams systemic <unk> contribute to cost reduction in <unk> patterning processes as it features low damage Olga.

Toshiki Kawai: Exord two is composed of two moves, namely dual match reactor and quadmatch reactor to deposit high-quality films with high throughput. Class cluster beams system, Acrevia, contributed to cost reduction in e-e-e-e-e-partening processes as it features well-damaged order-fine line with its formation and profile correction. We have already started developing these systems to multiple customers for their evaluation and expect that they will contribute to their achievement of fiscal 2027 sales and perfect goals in the mid-term management plan.

Speaker Change: <unk> line with its formation and profile correction.

Speaker Change: We have already started digitally engaged systems to multiple customers for their evaluation and expect that they will contribute to the achievement of fiscal 2027 sale of simplistic bills in the midterm management plan.

Speaker Change: Okay.

Speaker Change: In this quarter, we complete its share repurchase of about 80 billion that we announced in May.

Toshiki Kawai: In this quota, we completed shared repurchase of about 80 billion yen that we announced in May.

Toshiki Kawai: In this quota, we completed a shared repurchase of about 80 billion yen that we announced in May. Next, I will present financial estimates for fiscal 2025. As I presented earlier, driven by the strong demand for AI-related devices, WFE's market is currently in recovery. Towards calling the 2025 full-fledged WFE spending, I expected to start with advanced memory and advanced logic. We have revised the financial estimate upward by reflecting the first quota results and latest market trends. Fiscal 2025 four-year financial estimates higher to 3.300 billion yen for net sales, 1.372 billion yen for gross profit, 627 billion yen for operating income, and 478 billion yen for net income are attributable to owners of parents.

Speaker Change: Next I will present financial estimates for fiscal 2025.

Toshiki Kawai: Next, I will present financial estimates for fiscal 2025. As I presented earlier, driven by the strong demand for AI-related devices, WFE's market is currently in recovery. Towards calling the 2025 full-fledged WFE spending, I expected to start with advanced memory and advanced logic. We have revised the financial estimate upward by reflecting the first quota results and latest market trends, fiscal 2025 four-year financial estimates higher to 3.300 billion yen for net sales, 1.372 billion yen for gross profit, 627 billion yen for operating income, and 478 billion yen for net income are attributable to owners of parents.

Speaker Change: As I presented earlier driven by the strong demand for AI related devices Wp's market is currently in recovery towards called into 2025 full fledged <unk> spending I expect it to spot for advanced memory and advanced logic.

Speaker Change: We have revised the financial estimates upward by reflecting their first quarter results and latest market trend.

Speaker Change: Fiscal 2000, <unk> financial estimates are to achieve 300 billion meaningful net sales one trillion <unk> 2 billion yen for gross profit 627 billion for operating income and 478 billion for net income attributable to owners of parent.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: In order to capture future growth opportunity as much as possible, we plan to invest 253 billion yen for RMG in this fiscal year.

Toshiki Kawai: In order to capture future growth opportunity as much as possible, we plan to invest 253 billion yen for RNG in the fiscal year. Nye-Sel's Roku Profits, Resprofit Mineshin, Authorating Income, Nye-Rincome, and ETS, I expected to hit record high.

Toshiki Kawai: In order to capture future growth opportunity as much as possible, we plan to invest 253 billion yen for RNG in the fiscal year. Nye-Sel's Roku profits, Resprofit Mineshin, Authorating income, Nye-Rincome, and ETS, I expected to hit record high. This slide shows that the new equipment sales focus in Fiscal 2025. As shown here, sales are recovering after becoming out in the first half of fiscal 2024. Reflecting the latest market trend, we have revised the memory and logic sales proportion. This shows our plans for R&D expenses and CapEx. In fiscal 2025, as presented before, we expect R&D expenses of 253 billion yen, CapEx of 170 billion yen, and depreciation of 63 billion yen, all of which are expected to hit record high.

Speaker Change: Net sales gross profit gross profit margin operating income net income and EPS I expect it to hit record high.

Speaker Change: This slide shows the SPE equipment sales focus in fiscal 2025 as shown here sales side recovering after bottoming out in the first half of fiscal 2024, reflecting the latest market trend we.

Toshiki Kawai: This slide shows that the new equipment sales focus in fiscal 2025. As shown here, sales are recovering after becoming out in the first half of fiscal 2024. Reflecting the latest market trend, we have revised the memory and logic sales proportion.

Speaker Change: <unk> revised the memory and logic sales proportion.

Speaker Change: This shows our plans will R&D expenses and Capex in fiscal 2025 as presented before we expect R&D expenses of 253 billion yen Capex of 170, <unk> Union and depreciation of 63 billion although.

Toshiki Kawai: This shows our plans for R&D expenses and CapEx. In fiscal 2025, as presented before, we expect R&D expenses of 253 billion yen, CapEx of 170 billion yen and depreciation of 63 billion yen, all of which are expected to hit record high.

Speaker Change: I expected a record high.

Speaker Change: Okay.

Speaker Change: This slide shows the dividend forecast.

Toshiki Kawai: This slide shows the dividend focus. Based on the vision of fiscal 2025 financial estimate, the full year dividend per share is expected to be 590 yen.

Toshiki Kawai: This slide shows the dividend focus. Based on the vision of fiscal 2025 financial estimate, the full year dividend per share is expected to be 590 yen. This is my last slide, showing total return amount over the past few years. The total return amount in this fiscal year, combining the dividend per share and share the purchase that I presented earlier, is expected to be 319.8 billion yen, hitting record high. Thank you very much.

Speaker Change: Based on the division in fiscal 2025 financial estimate the full year dividend per share is expected to be 519 Yang.

Speaker Change: This is my last slide showing portal Regina amount over the past few years.

Toshiki Kawai: This is my last slide, showing total return amount over the past few years. The total return amount in this fiscal year, combining the dividend per share and share the purchase that I presented earlier, is expected to be 319.8 billion yen hitting record high.

Speaker Change: The total <unk> reached an amount in this fiscal year, combining the dividend per share and share repurchase that I presented earlier is expected to be $319 8 billion hitting a record time.

Toshiki Kawai: Thank you very much.

Speaker Change: Thank you very much this concludes my presentation.

Toshiki Kawai: This concludes my presentation.

Kenji Yasui: This concludes my presentation. We will have question and session until 6:30 Japan time. You can ask questions either in Japanese or English, but as our speakers are on the Japanese channel, please allow us to take all your questions only in Japanese. If you ask a question in Japanese, please click the raise hand button on the WebEx. For details, refer to the instructions attached to the invitation email. I will close the name of the person who will ask a question one by one. Our secretariat will contact you in the first, so please check the WebEx chat box.

Speaker Change: Yeah.

Speaker Change: We will have a question and session until that age of on time.

Unknown Executive: We will have question and session until 630 Japan time. You can ask questions either in Japanese or English, but as our speakers are on the Japanese channel, please allow us to take all your questions only in Japanese. If you ask a question in Japanese, please click the raise hand button on the WebEx. For details, refer to the instructions attached to the invitation email. I will close the name of the person who will ask a question one by one.

Speaker Change: You can ask questions either in Japanese or English, but as our speakers on the Japanese shuttle. Please allow us to take all your questions only in Japanese if you ask a question in Japanese please click the raise hand button on the Webex with details. Please refer to the instructions at that steady indication E mail.

Speaker Change: Our call the name of the person who asked the question one by one our superior carriers will contextual and advanced so please check the webex chat box.

Unknown Executive: Our secretariat will contact you in the first, so please check the WebEx chat box. When asking a question, you are kindly requested to unmute your microphone for yourself. When your question is answered by our entities, then please hit the raise hand button once again to remove, raise hand signal. For questions in English, please use WebEx chat box and give your affiliation name and question in text and send it to our secretariat.

Speaker Change: When asking a question you are current day requested to mute your microphone for yourself. When you are question is answered by our entities attendees. Please hit the reason spud and once again to remove the signal.

Kenji Yasui: When asking a question, you are kindly requested to unmute your microphone for yourself. When your question is answered by our entities, then please hit the raise hand button once again to remove the raise hand signal. For questions in English, please use the WebEx chat box and give your affiliation name and question in text, and send it to our secretariat. We will explain from answering question if your name and application are not given. On the Japanese channel, we will translate your question in this question, and I will read it out in Japanese, and speakers will answer in Japanese.

Speaker Change: Four questions in English. Please use webex chopped box and gives you off aviation gain I mean question index and send it to our Secretariat, whereas I think Lamar showing question if your name.

Unknown Executive: We will explain from answering question if your name and application are not given. On the Japanese channel, we will translate your question in this question, and I will read it out in Japanese and speakers will answer in Japanese. On the English channel, the question answer will be simultaneously interpreted into English on the real term basis. So we'd like to take questions from as many participants as possible.

Speaker Change: On vacation or not given the Japanese channel will translate your question in your question and I will read out in Japanese and speakers will answer in Japanese on the English channel question answer won't be simultaneously interpreted into English on the real time basis.

Yu Yoshida: On the English Channel, the question answer will be simultaneously interpreted into English on the real term basis. So we'd like to take questions from as many participants as possible. We will take one question prepared soon. If time allows us, we will take additional questions. questions. So fast question. The fast question is from Mr. Yoshida of Shih-L-S-E-S-E-Q-E-T-S-J-A-P-E-S. Thank you very much. I am Yoshida from Shih-L-S-E-S-E-Q-E-T-S-E-Q-E-G. Thank you very much. I have one question regarding slide 17. The SPU equipment sells focus. When you look at the composition, when I calculate, country logic is declined while the DRAM sells increased for country logic.

Speaker Change: As we back to take questions from as many participants as possible. We will take one question per person. If time allows we will take additional questions.

Unknown Executive: We will take one question prepared soon. If time allows us, we will take additional questions.

Speaker Change: So first question.

Speaker Change: If I ask question.

Speaker Change: Is from Mr. Yoshida of Sheila Securities shutdown Mr. Yoshizawa. Please.

Tetsuya Wadaki: [inaudible] Shibano Shibano Shibano Shibano Shibano Shibano Shibano Shibano Shibano Shibano[inaudible] Shibano Shibano Shibano Shibano and memory that the investment is growing right now. The PC and smartphone also have AI functions. Therefore, for PCs and smartphones, the mutualization ratio was not so high in the past, so there was no need for the new investment in the past for AI servers. However, the mutualization rate has been increasing, so they have no choice. Our customers need to do some new investment. So this is the current status of the market.

Speaker Change: Thank you very much <unk> securities. Thank you very much.

Speaker Change: I have one question.

Speaker Change: Regarding slide 17.

Speaker Change: The SP.

Speaker Change: Equipment.

Speaker Change: Sales forecast when you look at the competition.

Speaker Change: I calculate foundry logic is decline.

Speaker Change: DRAM sales increased for foundry logic.

Speaker Change: The leading mature node and China. So there are different categorization, so which portion is getting weaker.

Toshiki Kawai: The leading material and China, so there are different categorization. So which portion is getting weaker? That's my question. On the other hand. For DRAM, the advanced China, there are different categorization. Again, which portion is getting stronger? Thank you very much. Let me answer to your question. Shun, I am Kawaii. In principle, AI related devices are the driver growing very fast. On the same time, for smartphones, I also equipped with AI and investment for smartphone with AI is also increasing. Therefore, for some customers, the leading-edge investment has been changed for AI-related devices or logics for AI server remains strong.

Speaker Change: My question on the other half for DRAM.

Speaker Change: <unk> advanced China.

Speaker Change: There are different categorization again, which portion is getting stronger.

Speaker Change: Thank you very much let me answer to your question.

Speaker Change: Shane I am callout in principle AI related devices.

Speaker Change: The driver growing very fast.

Speaker Change: The same time for smartphones.

Speaker Change: Also equipped with AI.

Speaker Change: An investment for smartphones with AI is also increasing.

Speaker Change: Therefore.

Speaker Change: For some customers.

Speaker Change: The heating edge investment.

Has been changed.

Speaker Change: For <unk> devices.

Logics for AI server.

Speaker Change: Remained strong.

Speaker Change: For memory demand is rather big therefore, some larger clients are replaced by memory production.

Toshiki Kawai: For memory, demand is rather big. Therefore, some logic lines are replaced by memory production because of space limitation. So some customers are switching from Logic Line to memory. So leading-edge advanced memory investment is growing rapidly. Some advanced logic has been revised. Because of that, this kind of composition has been represented. So, as for China, you just mentioned in your question, this or by little, AI related investment is increasing gradually in China. In the proportion, I believe in the future, 25% to 30% should be the proportion. That's what I said before. For the second half of this year, the proportion of China will go below 40%.

Speaker Change: Because of space limitations, so some customers switching from logic line to mentally so leading edge advanced memory investment is growing rapidly some.

Speaker Change: Advanced logic has been revised.

Speaker Change: Because of that this kind of competition.

Speaker Change: Has been presented.

Speaker Change: As for China, We just mentioned in your question.

Speaker Change: We just feel biodiesel AI Dai ichi.

Speaker Change: Investment is increasing gradually in China.

Speaker Change: A portion.

Speaker Change: I believe in the future, 25% to 30% should be the proportion that's what I said before.

Speaker Change: For the second half of this year.

Speaker Change: The proportions of the China will go below 40%.

Speaker Change: In other words.

Toshiki Kawai: In other words, for the third quarter, the China proportion will be still above 40%, but the fourth quarter, the China proportion will go down below 40%. That's our expectation for China proportion. That's for your question. The AI related devices is rather strong. and memory that the investment is growing right now. The PC and smartphone also have AI functions. Therefore, for PCs and smartphones, the mutualization ratio was not so high in the past, so there was no need for the new investment in the past for AI servers. However, the mutualization rate has been increasing, so they have no choice.

Speaker Change: Third quarter, their China proportion will be still above 40%, but the fourth quarter.

Speaker Change: The China proportion will go down below 40%.

Speaker Change: That's our expectation for China propulsion as for your question.

Speaker Change: <unk> devices.

Speaker Change: Rather strong.

Speaker Change: And memory.

Speaker Change: <unk> is growing right now.

Speaker Change: PC and smartphone also have AI functions.

Speaker Change: Therefore.

Speaker Change: For Pcs and smartphones.

Speaker Change: The utilization rate show lets not so high in the past.

Speaker Change: So there is no need for the new investment in the past for AI servers.

Speaker Change: However utilization rate has been increasing so they have no choice our customers need to.

Toshiki Kawai: Our customers need to do some new investment. So this is the current status of the market. Thank you very much. So, in summary, for the China focus, there are no changes from the previous focus. As for logic, there are some changes; the total amount declined a little bit, but the logic for servers is still strong. On the other hand, for the environment, the investment for the advanced courses is accelerated. Is my understanding correct? Yes, that's how we understand the market situation. Thank you very much. That's very clear. Mr. Yoshida, thank you very much for your question.

Speaker Change: Just some new investment.

Speaker Change: So this is the current status of the market.

Speaker Change: Thank you very much so in summary.

Speaker Change: The China forecast there have been no changes from the previous forecast as for logic NSM changes that total amount declined a little bit, but the logic for servers still strong on the other hand for DRAM.

Tetsuya Wadaki: Thank you very much. So, in summary, for the China focus, there are no changes from the previous focus. As for logic, there are some changes, the total amount declined a little bit, but the logic for servers still strong. On the other hand, for the environment, the investment for the advanced courses is accelerated. Is my understanding correct? Yes, that's how we understand the market situation.

Unknown Executive: Thank you very much. That's very clear. Mr. Yoshida, thank you very much for your question.

The investment for the advanced doses is exit elated with my understanding correct, yes, that's how we understand the market situation. Thank you very much that's very clear.

Speaker Change: Mr. Yoshida. Thank you very much for your question.

Speaker Change: Next question is from Mr. <unk> of Morgan Stanley and USG Research, Japan can you hear me, yes, let's really.

Tetsuya Wadaki: Next question is from Mr. Gwadaki of Mogenstown, the MUFC Research Japan. Can you hear me? Yes. It was really a drastic change information from the front end process. You are ahead of others as for the factors for upward revision. The first quarter was very good in position, but there are some overlaps in the performance focus.

Tetsuya Wadaki: Next question is from Mr. Gwadaki of Mogenstown, the MUFC Research Japan. Can you hear me? Yes. It was really a drastic change information from the front end process. You are ahead of others as for the factors for upward revision. The first quarter was very good in position, but there are some overlaps in the performance focus. What was the good point in the first quarter in terms of market and in terms of business? Thank you very much. Well, as for the market factors, market-related factors, the customers' investment plan has been pulled forward and also additional investment for logic and AI.

Speaker Change: Drastic change information from the front end grosses you are ahead of others as for the factors will upward revision the past quarter was very good in.

Speaker Change: In position, but there are some these over.

Speaker Change: <unk>.

Speaker Change: In the performance focused what was a good point in the first quarter in terms of market and international business. Thank.

Toshiki Kawai: What was the good point in the first quarter in terms of market and in terms of business? Thank you very much. Well, as for the market factors, market-related factors, the customers' investment plan has been pulled forward and also additional investment for logic and AI. There are some additional investment for that and also test process. There are some additional investment, so some investment is pulling forward and logic process does have additional investment and also memory investment is recovering.

Speaker Change: Thank you very much.

Speaker Change: Well.

Speaker Change: As for the market factor.

Toshiki Kawai: So, they are pulling forward and are related investment and memory related additional investment. So, these are the major factors. For packaging process, testing process in other words, the weather prover was also added. So, these are the factors for this focus.

Speaker Change: Market related factors.

The customer's investment plan has been pulled forward and also additional investment while logic and AI that some additional investment for that and also test process.

Tetsuya Wadaki: There are some additional investment for that and also test process. There are some additional investment, so some investment is pulling forward and logic process does have additional investment and also memory investment is recovering. So, they are pulling forward and are related investment and memory related additional investment. So, these are the major factors. For packaging process, testing process; in other words, the weather prover was also added. So, these are the factors for this focus. I have a follow-up question earlier in the Yoshida-san's question as for the China market forecast. In the future, the China proportion in sales will be shrinking to 20% to 37%.

Speaker Change: There are some additional investment so some investment is putting forward.

Speaker Change: And logic process does have additional investment and also memory investment.

Speaker Change: Is recovering.

Speaker Change: So they are putting forth AI related investment and memory related. Additionally investment. So these are the major access for packaging process testing processing that ours does.

Speaker Change: With a pro over which also added.

Speaker Change: So these are the factors for this forecast I have a follow up question Olivia in Russia.

Unknown Executive: I have a follow-up question earlier in the Yoshida-san's question as for the China market forecast. In the future, the China proportion in sales will be shrinking to 20% to 37%. Actually, the China business booming means the orders will be deciderated.

Olivia: No shutdowns question as for the China market forecast and our future the China proportion himself will be shrinking to 22, 5% actually of the China business is booming that means get orders will be decelerated.

Kenji Yasui: Actually, the China business booming means the orders will be deciderated. Excuse me, are you asking about the China market trend? Yes, subscribe. I'm asking about China. That's correct. So when I heard the answer to the earlier question, I think the China market will be disvalated drastically. As for that issue, Mr. Yatsuda will answer to the question, as for China, from the... There have been no major changes from racial guidance that, as Mr. Kawai said earlier, especially in China, there are some acceleration of the investment therefore. I think the sales are recognized earlier than expectations; that there is more. You can see some decline in the sales recognition in the second half of this year.

Olivia: And the I asking about the China market trend, yes, that's correct I am asking about China that is correct.

Unknown Executive: Excuse me, are you asking about the China market trend? Yes, subscribe. I'm asking about China. That's correct. So when I heard the answer to the earlier question, I think the China market will be disvalated drastically.

Speaker Change: So when I heard the answer to earlier question I think the China market will be digitally due to drastically.

Speaker Change: As for that issue Mr. You're through that will answer to the question is for China.

Koichi Yatsuda: As for that issue, Mr. Yatsuda will answer to the question, as for China, from the... There have been no major changes from racial guidance that as Mr. Kawai said earlier, especially in China, there are some acceleration of the investment therefore. I think the sales are recognized earlier than expectations, that there is more you can see some decline in the sales recognition in the second half of this year.

Speaker Change: There have been no major changes from our initial guidance that as Mr. <unk> said earlier, especially in China. There are some.

Speaker Change: Acceleration of the investment therefore.

Speaker Change: I think the sellers are recognized earlier than expectation. That's the reason why you can see some decline in details because an issue in the second half of this year.

Thank you very much that's very clear. Thank you very much Mr. <unk>. Thank you very much for your question next question is from Mr. <unk> with Goldman Sachs, Japan, I am no comment I. Thank you very much can you hear me.

Unknown Executive: Thank you very much, that's all clear. Thank you very much Mr. Wataki. Thank you very much for your question.

Tetsuya Wadaki: Thank you very much; that's all clear. Thank you very much, Mr. Wataki. Thank you very much for your question.

Shuhei Nakamura: Next question is from Mr. Nakamura, Ms. Saksepani. I am Nakamura. Thank you very much. Can you hear me? Yes. On page 14, you talked about cryogenic etching for NAND, and you said the development and variation for high volume production is going well, which gave me some updates to the past three months. American competitor also has the new product for cryogenic etching technology.

Shuhei Nakamura: Next question is from Mr. Nakamura, Ms. Saksepani. I am Nakamura. Thank you very much. Can you hear me? Yes. On page 14, you talked about cryogenic etching for NAND, and you said the development and variation for high volume production is going well, which gave me some updates to the past three months. American competitor also has the new product for cryogenic etching technology. One year ago, you made an announcement, so you can get some fast-come benefits or advantages, but are there any other competitive advantages of your products, and are there any advantages you can use in your negotiation with your customers?

Speaker Change: Yes.

Speaker Change: On page 14.

Speaker Change: You talked about cryo journey itching for NAND, and you said the development and validation for high volume production is going well. So could you give me some updates for the past three months American competitor also have the new product for cryogenic itching technology.

Speaker Change: So one year ago, you've made announcements. So you can get some past comma benefits advantageous but are there any other competitive advantage of your product and are there any advantage you can use in your negotiations with your customers. So.

Toshiki Kawai: One year ago, you made announcement, so you can get some fast-come benefits or advantages, but are there any other competitive advantage of your products, and are there any advantage you can use in your negotiation with your customers? First of all, updates of the past three months. So, evaluation is going on very steadily. As far as we are concerned, from the previous record, we already delivered the evaluation to the customers. And we have been working on the evaluation of a tool by using reference at the customer service, and results are very well.

Speaker Change: The festival updates over the past three months.

Shuhei Nakamura: First of all, updates of the past three months. So, evaluation is going on very steadily. As far as we are concerned, from the previous record, we already delivered the evaluation to the customers. And we have been working on the evaluation of a tool by using reference at the customer service, and results are very well. So, with high confidence level, we think we can take shares by using this product. However, we haven't won any official POR yet. So, according to the customers' investment plan from next year and when, they will start the pilot investment for pilot plans.

Speaker Change: So evaluation is going on very steadily as far as we are concerned from the previous record we OLED W. Baird D. VAT issue due to the customers and we have been working on the evaluation of our tools by using wafers at the customer Fabs and the results are very well.

Speaker Change: With high confidence level, we think we can take shares by using this product. However.

Toshiki Kawai: So, with high confidence level, we think we can take shares by using this product. However, we haven't won any official POR yet. So, according to the customers' investment plan from next year and when, they will start the pilot investment for pilot plans. Therefore, maybe we can bring PORR in the near future so that we can start the production toward next year. As for the competitors, as Nakamura-san said earlier, we have to have some fast-come advantage as for this technology, and we are very confident about technology itself.

Speaker Change: We haven't won any office shop, you ours, yet so.

Speaker Change: According to the customers' investment plans from next year and that they will start the pilot enrichment for pilot plan. Therefore, maybe we can bring people are in the near future. So that we can start the production to add next year as worthy competitor as.

Shuhei Nakamura: Therefore, maybe we can bring PORR in the near future so that we can start the production toward next year. As for the competitors, as Nakamura-san said earlier, we have to have some fast-come advantage as for this technology, and we are very confident about the technology itself. Therefore, when customers start the investment for high-volume production next year and year after, I think this will contribute a lot to ourselves. As for the evaluation proceedings, yes, the evaluation is processing very steadily. Therefore, toward the mass production transition, I think we have accelerated our effort right now. In that sense, in order for us to win shares, we are making good progress.

Speaker Change: As <unk> said earlier, we do have some fast come out advantage as for this technology and we are very confident of our technology itself. Therefore.

Toshiki Kawai: Therefore, when customers start the investment for high-volume production next year and year after, I think this will contribute a lot to ourselves. As for the evaluation proceedings, yes, the evaluation is processing very steadily. Therefore, toward the mass production transition, I think we have accelerated our effort right now. In that sense, in order for us to win shares, we are making good progress. This technology does not use CFGAS. Therefore, global warming potential is reduced by 84% compared with the previous technology.

Speaker Change: When customers start investments for high volume production next year and we are after I think this will contribute to offset.

Speaker Change: As for the variation proceedings is that evaluation is producing very steady therefore toward mass production trend.

Toshiki Kawai: Therefore, the market for etching process is getting larger, and this is good for environment, and we are getting very good domestic data for introduction into the mass production lines. So, we are accelerating our efforts so that we can make our system be adapted by the customer for mass production.

Speaker Change: Transition I think we have accelerated our efforts.

Speaker Change: Right now in that sense.

Speaker Change: In order for us to lean shares we are making good progress.

Speaker Change: <unk> does not you'd see if gas therefore global warming potential is reduced by 84% compared with the previous technology. Therefore, the market for itching process getting larger and this is good for environment and we are getting very good from big data.

Shuhei Nakamura: This technology does not use CFGAS. Therefore, global warming potential is reduced by 84% compared with the previous technology. Therefore, the market for etching process is getting larger, and this is good for environment, and we are getting very good domestic data for introduction into the mass production lines. So, we are accelerating our efforts so that we can make our system be adapted by the customer for mass production. 9 or 20 calendar 2027, 10 billion dollar market is expected. Are there any changes in your prospect? I mean, that how much share can you expect to get? Yes, critical processes.

Speaker Change: Warm introduction into the mass production lines.

Speaker Change: So we are accelerating our efforts so that we can.

Speaker Change: Our system.

Speaker Change: Adopted by the customer for mass production.

Speaker Change: <unk> or 'twenty calendar 'twenty 'twenty 710 billion dollar market as expected are there any changes in our prospect.

Unknown Executive: 9 or 20 calendar 2027, 10 billion dollar market is expected.

Toshiki Kawai: Are there any changes in your prospect? I mean, that how much share can you expect to get? Yes, critical processes. As for critical processes, we are very steady and we are confident. The market size depends on the number of tiers of the customers, how much they are going to use cryogenic etching doses depending on that market size will change. But in the future, the number of tiers we are increasing and when things are getting creeped out and critical, our etching will be adapted by customers more and more. Under such expectation, we are working very steady for the evaluation process. Thank you very much. Mr Nakamura, thank you very much for your question.

Speaker Change: How much share can you expect to get.

Speaker Change: Yes.

Critical processes.

For critical purchases, we are very steady and we are confident the market size.

Shuhei Nakamura: As for critical processes, we are very steady and we are confident. The market size depends on the number of tiers of the customers; how much they are going to use cryogenic etching doses depending on that market size will change. But in the future, the number of tiers we are increasing, and when things are getting creeped out and critical, our etching will be adapted by customers more and more. Under such expectation, we are working very steady for the evaluation process. Thank you very much. Mr. Nakamura, thank you very much for your question.

Speaker Change: Depends on the number of tiers of the customers how much they are going to use cryogenic hedging process, depending on that market size will change, but in the future.

Speaker Change: The number of tiers with increasing and when it seems like it increased at all and critical are itchy will be adopted by customers more and more and as such expect expectation. We are working very steady for devaluation process. Thank you very much.

Speaker Change: Mr Knock on wood I. Thank you very much for your question.

Mr. Shimon: Next question, Mr. Shimon will cause some securities.

Unknown Executive: This question is Mr Shimamoto Oka-san's security. Can you hear me? Yes, we can hear it.

Masahiro Shibano: This question is Mr. Shimamoto Oka-san's security. Can you hear me? Yes, we can hear it. So, I have a question. 2025 WFE market. So, I think that your slides are not changed from the previous meeting. However, I want to get some focus for the major customers' investment plan for each major application. Also, including China, I want to ask about your opinion about the focus of the WFE market in 2025. Well, thank you very much for your question. The investment for the round is very well. So, next year, you can see the increase in investment for the round for 3D round.

Shimon: Can you hear me, yes, we can hit so I have a question 2025 Wi Fi market.

Unknown Executive: So, I have a question. 2025 WFE market. So, I think that your slide are not changed from the previous meeting. However, I want to get some focus for the major customers investment plan for each major application.

No.

Speaker Change: I think your slide are not changed from the previous meeting however.

Speaker Change: To get some forecast for the major customers investment plan will each major application.

Speaker Change: Also including China, I want to ask about your opinion about forecast.

Toshiki Kawai: Also, including China, I want to ask about your opinion about the focus of the WFE market in 2025. Well, thank you very much for your question. The investment for the round is very well. So, next year, you can see the increase in investment for the round for 3D round. The current investment, actually, the amount of investment is slightly smaller than the investment for the round for advance logic. Probably, the investment for 3D round will be close to doubled next year.

Speaker Change: The Wi Fi market in 2025.

Speaker Change: Well. Thank you very much for your question.

Speaker Change: The investment for DRAM.

Speaker Change: Is very well.

Speaker Change: So next year you can see the increase in investment for DRAM for three D. NAND.

Speaker Change: The current investment.

Toshiki Kawai: The current investment, actually, the amount of investment is slightly smaller than the investment for the round for Advance Logic. Probably, the investment for 3D round will be close to doubled next year. The investment for advanced logic for AI servers, PCs, and smart phones, I expect it to increase. And for industrial applications, the inflation pressures will push up the prices, and also EV-related trends have some impact. So, as for industrial applications for one year to go, there are some adjustments, and adjustments will continue for about one year. For China, so, emerging chip makers are active in investing.

Speaker Change: Actually the amount of investment is slightly more than the investment for DRAM wildfire logic, probably the investments for <unk> NAND will be close to doubled next year.

Speaker Change: The investment for advanced logic.

Toshiki Kawai: The investment for advanced logic for AI servers, PCs and smart phones, I expect it to increase. And for industrial applications, the inflation pressures will push up the prices and also EV related trends have some impact. So, as for industrial applications for one year to go, there are some adjustments and adjustments will continue for about one year.

Speaker Change: For AI servers.

Speaker Change: Pcs and smartphones.

Speaker Change: I expect it to increase.

Speaker Change: And for industrial applications.

Speaker Change: The inflation pressures.

Speaker Change: We will push up the prices and also easy dated.

Speaker Change: Trent has some impact.

Speaker Change: So as for industrial application for one year to go.

Speaker Change: There are some adjustment.

Speaker Change: An adjustment will continue for about one year.

Speaker Change: For China.

Toshiki Kawai: For China, So, imagining chip makers are active in industry, very much modern 20 customers started to make and all together, and the investment was completed, it's cycle, but this year and onward, the investment China is expected to decrease, I said the proportion of China is getting closer to the previous level, little by little, the investment advanced area will be increasing and also there as a China, proportion gets smaller a little bit, that's how we view for next year, and if you very much I have a follow-up question with the supplies in the recent financial announcement of some company, in the sense for the logic boundary, I believe you received inquiries, therefore you are able to see some of this trend in the investment in next year, for this fiscal year, yes we have revised this area to come up with the revised financial estimates, for next fiscal year, because it really depends on customers, so we are not in opposition to say anything about next year, but we think customer, I expect it to continue investment, thank you very much, that's very clear, Mr. Shimamoto, thank you very much for your question, next question is from Mr. Yoshioka of Momura Situities. Hi, I'm Yoshioka of Momura Situities. Can you hear me? Yes, you can hear you. Thank you very much.

Speaker Change: So imagine.

Speaker Change: Chipmakers are active in investing.

Speaker Change: Very much more than 20.

Toshiki Kawai: Very much, modern 20 customers started to make investment altogether. And the investment was completed. It's cycle, but this year, no word; the investment China is expected to decrease. I said the proportion of China is getting closer to the previous level, little by little. Investment for advanced area will be increasing, and also there as a additional investment for PCs and smartphones. And China, proportion gets smaller a little bit. That's how we view for next year. Thank you very much. I have a follow-up question. There was a surprise in the recent financial announcement of some company. In that sense, for the logic boundary, I believe you received inquiries.

Speaker Change: Customers.

Speaker Change: Started to make investment.

Speaker Change: Altogether and that investment was completed is cycle, but this year and onward is investment in China.

Speaker Change: Is expected to decrease.

The proportion of China is getting closer to the previous level little by little.

Speaker Change: Investment for advanced area will be increasing and also there are some additional investment for Pcs and smartphones and China propulsion gets smaller.

Speaker Change: That's how we view for next year.

Thank you very much I have a follow up question was the supplies in the recent financial instrument of some company.

Speaker Change: In that sense for the logic foundry I believe you've achieved inquiries therefore.

Speaker Change: You are able to see some increase in trend in the leading edge investment in next year.

Toshiki Kawai: Therefore, you are able to see some interesting trends in the leading edge investment in next year. For this fiscal year, yes, we have revised this area to come up with the revised financial estimates. For next fiscal year, because it really depends on customers, so we are not in the position to say anything about next year. But we think customers are expected to continue investment. Thank you very much. That's right. Mr. Shimamoto, thank you very much for your question.

Speaker Change: For this fiscal <unk>.

Speaker Change: Cisco here, yes, we have revised this area to come up with the revised financial estimates.

Speaker Change: For next fiscal year.

Speaker Change: It really depends on customer shall we are not in a position to say anything about next year.

Speaker Change: But we are seeing customer.

Mr. Shlomo: Expect it to continue investment. Thank you very much that's very clear Mr. Shlomo. So thank you very much for your question next.

Speaker Change: Next question is from Mr. Yoshioka of Nomura Securities.

Atsushi Yoshioka: Next question is from Mr. Yoshiyoka of Nomura Securities. Hi, I'm Yoshiyoka of Nomura Security. Can you hear me? Yes, we can hear you. Thank you very much. Another high risk of emerging for this quota and product mix is improved. Also, there is no one else investment for inventory loss. That's what you said earlier. When it comes to product mix, Kuzhigit Memo details is that because of the applications or because of the regions, Kuzhigit has some reasons for the product mixing improvement. Also, I look at the plan for this area, second quota. So, the growth profit margin decline and could third quota, growth profit margin goes up.

Speaker Change: Hi, I'm Yoshioka of Nomura Securities can you hear me, yes, we can hear you.

Hiroshi Kawamoto: So I have a question without being looked up at margin, so the first, which is 7.6% is not a high looked up at margin for this quota and product mix is improved, and also there is no one loss investment for inventory loss, that's what you said earlier, when it comes to product mix, we want details, because of the applications, because of the reasons, we should give us some reasons for the product mixed improvement, so I looked at the plan for this area, 6.4% so the goes up, so how do we understand your plan for the gross profit margin for the following quarters within this fiscal area? This is Kawamoto, then you have a question for your second question.

Speaker Change: Thank you very much.

Speaker Change: So.

Speaker Change: I have a question regarding the gross profit margin.

Speaker Change: So the fast.

Speaker Change #100: 47, 6% another high gross profit margin for this quarter and product mix as <unk> no. So there is no.

Speaker Change #100: One off investment.

Speaker Change #101: Century loss, that's what you said earlier when it comes to product mix.

Speaker Change #101: Give me more details.

Speaker Change #102: Is that because of the applications that because of the lesions could you give us some leases.

Speaker Change #103: For the product mix improvement no. So I look at the plan for this area.

Speaker Change #103: Second quarter.

Speaker Change #103: So the gross profit margin decline.

Speaker Change #104: Third quarter gross profit margin goes up once again, so how do we understand your plan for the gross profit margin for the following quarters within this fiscal year. This is color model then the answer to your question or your second question.

Hiroshi Kawamoto: Once again, so how do we understand your plan for the growth profit margin for the following quarters within this fiscal year? This is Kawamoto. Let me answer your question. For your second question, for the second quota, growth profit margin is declined. That's what you said in your question. And after that, second half of this fiscal year, growth profit margin is expected to grow. Let me explain why this happens. As you pointed out, as for the first quota, growth profit margin was very good. The very good results were achieved, as Kawai said earlier. There are some pulling forward, and cells increased significantly.

Speaker Change #105: For the second quarter gross profit margin is.

Hiroshi Kawamoto: For the second quota, gross profit margin is declined, that's what you said in your question, and if there's that, the second half of this fiscal area, gross profit margin is expected to grow, but you explain why this happens, as you point it out, that's what the first quota, gross profit margin is very good. The very good results were achieved as Kawai said earlier, there are some pulling forward and cells increased significantly.

Speaker Change #106: Lines. That's what you said in your question Dennis does that kick in half of the fiscal year were spotted margin is expected to grow.

Speaker Change #107: Let me explain why this happens as you pointed out for the past quarter, where specific margin was very good.

Speaker Change #107: They're very good results were achieved as <unk> said earlier.

Dennis: There are some.

Dennis: Putting forth.

Speaker Change #110: Sales increased <unk> significantly as for the second quarter because of the backlash of group performance in the first quarter or is it a slight decrease in the sales.

Hiroshi Kawamoto: As for the second quarter, because of the backslash of the performance in the first quarter, there are some decreased in the cells. In the previous fourth quarter, so inventory disposal or the strategic cells of the old model parts are also incorporated. For the first quarter and second quarter, when you compare those two quarters, in our case, the cost increases in the second quarter, that's a kind of trend of our company, R&D expenses also increase in the second quarter, that's the trend of our company.

Hiroshi Kawamoto: As for the second quarter, because of the backslash of the performance in the first quarter, there are some decreases in the cells. In the previous fourth quarter, so inventory disposal or the strategic cells of the old model parts are also incorporated. For the first quarter and second quarter, when you compare those two quarters, in our case, the cost increases in the second quarter; that's a kind of trend of our company. R&D expenses also increase in the second quarter; that's the trend of our company. That's the reason why margin for the second quarter decrease. I think the operating profit margin is ranked by 0.7 percentage point.

Speaker Change #110: In the previous fourth quarter should inventory disposal or the <unk> strategic fell sharply or tomorrow punch also incorporated.

Speaker Change #111: For the first quarter and second quarter drop when you compare those two quarters in our case the cost increases in the second quarter. That's a kind of trend of our company R&D expenses also increased in the second quarter. That's veteran of our company. That's the reason why margin for the chicken.

Hiroshi Kawamoto: That's the reason why margin for the second quarter decrease, I think the operating profit margin is ranked by 0.7 percentage point. And for the second half of this year, cells are expected to increase by 100 billion through this upward revision, a shortage product. Profit margin will make a contribution to the cells of the second half in order to achieve those profit margins, we'd like to make every effort to achieve those focus. Thank you. Thank you very much.

Speaker Change #111: Quarter D piece I think the operating profit margin, we flagged by seven percentage points.

Speaker Change #111: And for the second half of this year sales are <unk>.

Hiroshi Kawamoto: And for the second half of this year, cells are expected to increase by 100 billion through this upward revision, a shortage product. Profit margin will make a contribution to the cells of the second half. In order to achieve those profit margins, we'd like to make every effort to achieve those focus. Thank you. Thank you very much. Mr. Yuka, could you please?

Speaker Change #111: <unk> increased by 100 billion.

Speaker Change #111: Through this upward revision in shortage product.

Speaker Change #111: Mind, you, we will make a contribution to the house of the second half in order to achieve those profit margins, we'd like to make every effort to achieve those.

Speaker Change #111: Forecast.

Speaker Change #111: Yes.

Speaker Change #111: Thank you very much ashish.

Speaker Change #111: Please.

Hiroshi Kawamoto: Mr. Yuka, could you please? I want to get some certification. According to your first explanation, first quarter, which was good, you talked about product mix improvement, because you gave me some details about the improvement of product mix, which drives good results for the first quarter.

Speaker Change #112: I have I want to get some clarification floating geographic expansion last quarter, which was good.

Toshiki Kawai: I want to get some certification. According to your first explanation, first quarter, which was good, you talked about product mix improvement, because you gave me some details about the improvement of product mix, which drives good results for the first quarter. This is Kawaii. Let me answer to your question. The major growth driver was Taiwan. DVR5, DRAM, HBM, GPU, and testing processes. In those areas, the cells to Taiwan was rather significant. And investment in North America was also big for logic, mainly for China. And the China customers pulled forward their investment. So there are some factors to increase our cells, so that are various factors actually, but by and large, the high value added can be achieved.

Speaker Change #113: Talked about product mix improvement.

Speaker Change #114: Could you give me some details are both improvement of product mix.

Speaker Change #114: Drive good results for the first quarter. This is Carl I, Let me answer to your question.

Toshiki Kawai: This is Kawaii, let me answer to your question. The major growth driver was Taiwan. DVR5, DRAM, HBM, GPU, and testing processes. In those areas, the cells to Taiwan was rather significant. And investment in North America was also big for logic, mainly for China. And the China customers pulled forward their investment. So there are some factors to increase our cells, so that are various factors actually, but by and large, the high value added can be achieved.

Speaker Change #115: The major.

Speaker Change #116: Growth driver.

Speaker Change #114: Yes.

Speaker Change #114: Taiwan.

Speaker Change #114: D D R five DRAM.

Speaker Change #114: H D M Gpus and testing processes in those areas.

Speaker Change #114: The sales to Taiwan was rather significant.

Speaker Change #114: The investment in North America was also a big four logic Mindy.

Speaker Change #114: For China.

Speaker Change #114: And the China customers pulled forge their investment. So there are some factors to increase ourselves. So there are various factors actually but by on March.

Speaker Change #114: High value added.

Speaker Change #114: Can be achieved also the depreciation has been completed.

Toshiki Kawai: Also, the depreciation has been completed and high value added products deliver high profit margins. Therefore, the marginal profit has been increasing generally. So when you think about operating profit margin, maybe we should think about the fixed cost ratio again cells, but by and large, the gross profit margin of the product has been increasing. On the other hand, for example, inventory turnover ratio or models are changing, so when there is a new product penetration, because of the sales for the old models, we have set strategic price for the older model, or when the new performance, a new product gets high performance, so we need to dispose in the inventory to some extent.

Toshiki Kawai: Also, the depreciation has been completed, and high value added products deliver high profit margins. Therefore, the marginal profit has been increasing generally. So when you think about operating profit margin, maybe we should think about the fixed cost ratio again cells, but by and large, the gross profit margin of the product has been increasing. On the other hand, for example, inventory turnover ratio or models are changing, so when there is a new product penetration, because of the sales for the old models, we have set strategic price for the older model, or when the new performance, a new product gets high performance, so we need to dispose in the inventory to some extent.

Speaker Change #114: And high value added products deliver high profit margins.

Speaker Change #114: Therefore, the marginal profit.

Speaker Change #117: Has it been increasing generally.

Speaker Change #118: So when you think of the operating profit margin, maybe we should think about the fix.

Gabe: Cost of Asia himself, but by and large Gabe.

Speaker Change #120: Gross profit margin of the product has been increasing.

Speaker Change #120: On the other hand.

Speaker Change #121: For example, inventory turnover ratio our models are changing so when that is.

Speaker Change #121: Product penetration.

Speaker Change #121: The sales for the old models.

Speaker Change #121: We have.

Speaker Change #121: Fifth strategy place or the older model or when the new performers and new products is high performance. So we need to.

Speaker Change #122: Disposed in the inventory to some extent that's what <unk> also said earlier.

Toshiki Kawai: That's what Mr. Kawamoto said earlier, so these are the factors of the result of first quarter and second quarter in terms of the sales. Thank you very much for your other ideas of explanation. Thank you very much.

Atsushi Yoshioka: That's what Mr. Kawamoto said earlier, so these are the factors of the result of first quarter and second quarter in terms of the sales. Thank you very much for your other ideas of explanation. Thank you very much. Mr. Yoshiyoka, thank you very much for your question.

Speaker Change #122: So these are the factors.

Speaker Change #122: Of the results for first quarter and second quarter in terms of the gross profit margin.

Speaker Change #123: Thank you very much. Thank you very much for your other AG the explanation.

Speaker Change #123: Thank you very much and still yoshioka. Thank you very much for your question next question is from Mr. Yamamoto of Mizuho Securities.

Unknown Executive: Mr. Yoshiyoka, thank you very much for your question.

Yoshitsugu Yamamoto: Next question is from Mr. Yamamoto of Musical Securities. I have a question regarding the HFO NAND, so next year, 2025, your customers will start in this pilot because the mass production of V can start in 2026.

Yoshitsugu Yamamoto: Next question is from Mr. Yamamoto of Musical Securities. I have a question regarding the HFO NAND. So next year, 2025, your customers will start in this pilot because the mass production of V can start in 2026. In that sense, within this year, you can decide; you should win mass production POR. But in November, next financial announcement, if Mr. Kawai doesn't say anything about the winning of the mass production POR, that means you failed to take share. But on the other hand, when you win the mass production POR, maybe once, maybe your share for the NAND channel itself should be increasing.

Speaker Change #124: I have a question regarding the <unk> for NAND. So next year 2025 year customer those stocked interesting.

Speaker Change #125: <unk> because the mass production of 10, starting 2026.

Speaker Change #126: In that sense within this and the fact, you should lean mass production.

Yoshitsugu Yamamoto: In that sense, within this year, you can decide, you should win mass production POR, but in November, next financial announcement, if Mr. Kawai doesn't say anything about the winning of the mass production POR, that means you failed to take share, but on the other hand, when you win the mass production POR, maybe once, maybe your share for the NAND channel itself should be increasing. However, because about the introduction of cryo 3.0, it might be difficult for you to further improve your share.

Mr. Cola: But in November next financial announcement, if Mr. Cola It doesn't say anything about the reading of the mass production to you are that means to you.

Speaker Change #128: Felt to take share.

Speaker Change #129: On the other hand, when you win the mask reduction P. R. Maybe once maybe you can youre sure Fortinet journal nature should be increasing however, because of the introduction of <unk> three.

Shuhei Nakamura: However, because about the introduction of Cryo 3.0, it might be difficult for you to further improve your share. In comparison with Cryo 2.0, I heard that sales products is much higher in specification. However, from the people in the firm, when there is a product at the same performance, it is difficult or reluctant to increase the number of sales products because of the switching cost. But even if you can get the POR, how do you think about the future? It might be difficult for you to answer, but I really appreciate your answer. It is customer who make a decision for adoption, but number of, when the number of layers that gain is going up, our product advantage is really high.

Speaker Change #130: So it might be difficult for us to further improve your share.

Speaker Change #130: In comparison.

With the Cryo 2.0, I heard that tell us that it is much higher in specification. However from the people in the fab when there is a clear that at the same performance.

Yoshitsugu Yamamoto: In comparison with cryo 2.0, I heard that sales products is much higher in specification. However, from the people in the firm, when there is a product at the same performance, it is difficult or reluctant to increase the number of sales products because of the switching cost.

Speaker Change #131: Difficult or reluctance to increase the number of pills products because of the switching coasts, but even if you can get the appeal was how would you think about the future it might be difficult for you to answer but really appreciate your answer.

Toshiki Kawai: But even if you can get the POR, how do you think about the future? It might be difficult for you to answer, but really appreciate your answer. It is customer who make a decision for adoption, but number of, when the number of layers that gain is going up, our product advantage is really high. That's how customer use our equipment. As Mr. Yatsida said earlier, in 2026 and onward, we will be able to bring shares to be able to invite this new product. The variation by customer for their mass production and they also change their device structure.

Speaker Change #132: It is customer who will make a decision for adoption.

Speaker Change #133: But numbers of <unk>.

Speaker Change #134: When the number of layers that thing is going up our crews that advantage is really high that's how customer is that it's on a product.

Speaker Change #134: For which they are.

Speaker Change #134: Customers use our equipment.

Shuhei Nakamura: That's how customers use our equipment. As Mr. Yatsida said earlier, in 2026 and onward, we will be able to bring shares to be able to invite this new product. The variation by customer for their mass production, and they also change their device structure. There are many things happen, so we cannot say when we can get the mass production POR. There's also a factor of the yield enhancement evaluation. So at which point of time can we get the POR? I won't say that, but I'm sure that we are able to increase our share because of this new product from 2026.

Mr. <unk>: So as Mr. <unk> said earlier.

Speaker Change #136: In 2026, and we weren't.

Speaker Change #136: We will be able to.

Speaker Change #136: Being shares.

Speaker Change #136: Driven by this new product.

Speaker Change #137: The variation by customer for them mass production and they also changed their device structure.

Speaker Change #138: There are many things happen. So we cannot say when we can get the.

Toshiki Kawai: There are many things happen, so we cannot say when we can get the mass production POR. There's also a factor of the yield enhancement evaluation. So at which point of time can we get the POR? I won't say that, but I'm sure that we are able to increase our share because of this new product from 2026. Even if in November Mr. Kawai doesn't say anything about the mass production POR reading, maybe in the future because customer want to increase yield, customer may decide to replace the competitor's product with your products. So I don't know the replacement takes place all of sudden that customer's decision went to replace the equipment. But the evaluation is going on very steadily. Thank you very much.

Speaker Change #138: <unk> <unk>.

Speaker Change #138: There is also a factor of the yield enhancement devaluation.

Speaker Change #138: So at which point of time.

Speaker Change #138: Can we get people, who are I won't say that but I'm sure that we are able to increase our share because of this new product for 2026.

Mr color: Even if in November Mr color, he doesn't say anything about the mass production.

Yoshitsugu Yamamoto: Even if in November Mr. Kawai doesn't say anything about the mass production POR reading, maybe in the future because customer want to increase yield, customer may decide to replace the competitor's product with your products. So I don't know the replacement takes place all of a sudden that customer's decision went to replace the equipment. But the evaluation is going on very steadily. Thank you very much. Thank you very much, Mr. Yamamoto, for your question.

Speaker Change #140: Reading, maybe in the future because customer won't disease increase yield customer mediasite to replace the competitive competent does productivity represents.

Speaker Change #141: So I don't know the replacement fixed space all of sudden that customer's decision went to replace the equipment.

Speaker Change #141: But yes.

Speaker Change #142: That issue is going wrong.

Speaker Change #143: Very steadily.

Speaker Change #144: Thank you very much.

Jeff: Thank you very much and Australia Nonmetal for your question next question is given by Jeff. Let me just read it out the question from ideal interchange sung from <unk> Global English then the question is could you. Please explain what are the major reasons double P. M b.

Yoshitsugu Yamamoto: Thank you very much Mr. Yamamoto for your question.

Unknown Executive: Next question is given by Mr. Kawai.

Toshiki Kawai: Next question is given by Mr. Kawai. Please explain what are the major reasons of OPMB and why you revise up fiscal OPM guidance. Thank you very much for your question. Let me answer to your question in Japanese. First of all, as I reported earlier, we have revised ourselves by 100 billion yen, and that has some impact and fast quota. As you pointed out, we are a result one rather good. When you look at the results in the fast quota, we are scrutinizing the figures for the second half of year, and we think we can improve our profit margins to some extent.

Hiroshi Kawamoto: Please explain what are the major reasons of OPMB and why you revise up fiscal OPM guidance. Thank you very much for your question.

Speaker Change #146: And why you revised draft Cisco op guidance.

Speaker Change #147: Thank you very much for your question, let me answer to your question in Japanese.

Hiroshi Kawamoto: Let me answer to your question in Japanese. First of all, as I reported earlier, we have revised ourselves by 100 billion yen and that has some impact and fast quota. As you pointed out, we are a result one rather good. When you look at the results in the fast quota, we are scrutinizing the figures for the second half of year and we think we can improve our profit margins to some extent.

Speaker Change #147: The rule.

Speaker Change #149: As for net sales.

Speaker Change #149: As I reported earlier, we have revised ourself by 100 billion yen.

Speaker Change #149: And that has some impact in first quarter.

Speaker Change #149: As you pointed out we are a result of other goods when you look at the results in the past quarter.

Speaker Change #150: Uh huh.

Speaker Change #150: Scrutinizing the figures for the second half of the year and we think we can improve our profit margins to some extent. That's the reason why we have decided to revise profit margin upward although that is slight revision upward.

Hiroshi Kawamoto: That's why we have decided to revise profit margin upward, although that is slight revision upward. So 27% operating profit margin for four year basis. That's why I presented earlier in my presentation. As I said in the beginning, so by the edit of the product has been increasing in the leading edge area, we are working on the blockment. So the profit margin is going up because of the increase in the marginal profit ratio.

Toshiki Kawai: That's why we have decided to revise profit margin upward, although that is a slight revision upward. So 27% operating profit margin for four-year basis. That's why I presented earlier in my presentation. As I said in the beginning, so by the edit of the product has been increasing in the leading edge area, we are working on the blockment. So the profit margin is going up because of the increase in the marginal profit ratio. So together with the value edit, profit margin has been increasing in the commodity area. Depreciation has been declining, and this time, the number of process is gradually increasing.

Speaker Change #150: So a 27% operating profit margin for full year basis.

Speaker Change #150: The swap derivative earlier in my presentation.

Speaker Change #150: As I said in the beginning.

Speaker Change #151: So value added.

Speaker Change #152: That has been increasing in the leading edge area, we are working on development.

Speaker Change #151: Development.

Speaker Change #151: So the gross profit margin is going up because of the increase in the.

Speaker Change #153: Martin the appropriate ratio.

So together with the value added fifth margin has has been increasing in commodity area.

Hiroshi Kawamoto: So together with the value edit, profit margin has been increasing in the commodity area. Depreciation has been declining and this time, the number of process is gradually increasing. Top line goes up and R&D expenses, although we have revised the upwards, and Topline in Peace. Because of that, the ratio of R&D has declined, so these are the factors to improve the profit margins.

Martin: Depreciation has been declining and this time the number of process.

Is gradually increasing top line goes up and R&D expenses, although we have revised upward.

Hiroshi Kawamoto: Top line goes up, and R&D expenses, although we have revised the upwards. and Topline in peace. Because of that, the ratio of R&D has declined, so these are the factors to improve the profit margins. Chanson, thank you very much for your question.

Speaker Change #155: Top flagging piste.

Because of that the ratio of R&D has declined.

Speaker Change #155: So these are the factors to improve the profit margins.

Speaker Change #156: Jason. Thank you very much for your question next question is from especially at Alcoa of Bofa Securities.

Unknown Executive: Chanson, thank you very much for your question.

Mikio Hirakawa: Next question is from Mushtakira Kawawa of Biobay Security. I am Hirakawa from Biobay. Yes, we can hear you. Thank you very much. Regarding China investment, I want to ask for a question, but next year, 25 to 30 percent and proportion goes down, but still, the China proportion is rather high, because they continue their investment. I want to know more details or contents. Based on the inquiries you are receiving right now, what sort of investment is now going on in China?

Mikio Hirakawa: Next question is from Mushtakira Kawawa of Biobay Security. I am Hirakawa from Biobay. Yes, we can hear you. Thank you very much. Regarding China investment, I want to ask for a question, but next year, 25 to 30 percent and proportion goes down, but still, the China proportion is rather high, because they continue their investment. I want to know more details or contents. Based on the inquiries you are receiving right now, what sort of investment is now going on in China? Do you think there are investing for capacity in peace, or do they invest in for technology?

Speaker Change #157: I am <unk>.

Speaker Change #158: Bofa, yes, we can hear you. Thank you very much.

Alcoa: Regarding China investments I want to ask a question.

Speaker Change #160: Next year.

Speaker Change #160: <unk>, 5% to 30%.

Speaker Change #160: Proportion goes down, but still the China propulsion is rather high.

Speaker Change #161: Because they continue their investment.

Speaker Change #161: Want to know more details where content.

Speaker Change #162: Based on the inquiries that you are receiving right now what sort of investments with an ongoing one in China.

Speaker Change #162: There are.

Speaker Change #163: Investing for capacity increase or do they interesting for technology example, from 94 to <unk> 40, or 40 to 28 nanometer are there any trends in investment in China are they investments with capacity enhancement or investment or the.

Mikio Hirakawa: Do you think there are investing for capacity in peace or do they invest in for technology? For example, from 94 to 40 or 40 to 28 nanometer, are there any trends in investment in China? Are there investment for capacity enhancement or investment for the shrink father shrink? For industrial, let us think note devices that are investing quite a few in those areas. And also, the investment for pilot has been completed. One cycle, so proportion is expected to decline, actual amount of investment is expected to decline.

Mikio Hirakawa: For example, from 94 to 40 or 40 to 28 nanometer, are there any trends in investment in China? Are there investments for capacity enhancement or investments for the shrink father shrink? For industrial, let us think note devices that are investing quite a few in those areas. And also, the investment for pilot has been completed. One cycle, so proportion is expected to decline; actual amount of investment is expected to decline. So, Chinese customers may continue their investment, but they may suspend the investment. There are so many customers in China, and the customers have different purposes, objectives, so when it comes to trending, it's so difficult to give you one trend which covers entire China, but for power electronics.

Speaker Change #164: Shrink further shrink.

Speaker Change #164: For industrial let us see note.

Speaker Change #164: Devices there.

They are investing quite a few in those areas.

Speaker Change #164: And also the investment for pilot has been completed.

Speaker Change #164: One cycle so.

Speaker Change #164: The proportion.

Speaker Change #165: Is expected to decline actual amount of investment.

Speaker Change #165: It is expected to decline.

Speaker Change #165: So Chinese customer may continue the investment.

Mikio Hirakawa: So, Chinese customers may continue their investment, but they may suspend the investment. There are so many customers in China, and the customers have different purposes, objectives, so when it comes to trending, it's so difficult to give you one trend which covers entire China, but for power electronics. I talked about EV a little bit earlier, the investment for power electronics for ED in particular will be revised. That's what I said earlier, that has some impact. I didn't say 25 to 30 percent for next year, but previously the China proportion was about 25 percent to 30 percent, as a whole in industry.

Speaker Change #165: But they may suspend investments.

Speaker Change #165: There are so many customers in China.

Speaker Change #165: And the customers of different purposes.

Speaker Change #165: <unk>.

Speaker Change #166: So when it comes to trending.

Speaker Change #166: It's so difficult to give you one trend, which cover entire China, but for power electronics.

Speaker Change #166: I talked about EV, a little bit earlier, the investment for power electronics for E V in particular.

Mikio Hirakawa: I talked about EV a little bit earlier; the investment for power electronics for ED, in particular, will be revised. That's what I said earlier; that has some impact. I didn't say 25 to 30 percent for next year, but previously the China proportion was about 25 percent to 30 percent, as a whole in industry. The Western customers, the proportion of China was more than 30 percent in the past as well, but maybe in the future, the proportion of China will be about 25 to 30 percent because of the recovery of the investment for the advanced nose.

We will be revised that's what I said earlier that has some impact.

I didn't say, 25% to 30% for next year, but previously the China proportion was about 25% to 30%.

Speaker Change #166: As a whole in industry.

Speaker Change #166: Western customers.

Mikio Hirakawa: The Western customers, the proportion of China was more than 30 percent in the past as well, but maybe in the future, the proportion of China will be about 25 to 30 percent because of the recovery of the investment for the advanced nose.

Speaker Change #166: The proportion of China.

Speaker Change #166: With more than 30% in the past as well, but maybe in the future.

Speaker Change #166: Proportion of China will be.

Speaker Change #167: About 20.

Speaker Change #168: <unk>, 5% to 30% because of the recovery of the investment for the advanced nodes I have one follow up question in China.

Mikio Hirakawa: I have a pull-up question in China. There are certain subsidiaries coming out. Does that have some positive impact? Can you tell some impact when you receive inquiries? I'm sure as far as I know, there's no impact. We are sensing. [inaudible] This is about 40% of all, but in the third quarter, the China Propulsion will go down to the third percent, or above. For next fiscal year, the Propulsion goes down, compared with the Propulsion of China for this fiscal year, because of industrial application investment, will be decreased to some extent. The amount of the sales to China was so expected to decline.

Mikio Hirakawa: I have a pull-up question in China. There are certain subsidiaries coming out. Does that have some positive impact? Can you tell some impact when you receive inquiries? I'm sure, as far as I know, there's no impact; the eye sensing from the inquiries we receive. Thank you very much for your question.

Speaker Change #168: Aside from subsidiaries coming out.

Speaker Change #168: Does that has some positive impact can you tell some impact when that when you receive inquiries.

Speaker Change #169: I'm, sorry fall designer.

Shneur: Yeah Shneur.

Speaker Change #171: Impact we are sensing from the inquiries we receive thank you very much for your question.

Shneur: Our.

Speaker Change #172: Next question is from Mr. <unk> of Citigroup Global markets, Japan, and <unk> from Citigroup, Wi Fi market assumption and I want to ask.

Unknown Executive: Next question is from Mr. Chibano of City Grid Global Market Japan and Chibano from City Grid. I would like to ask a question regarding the revision of your plan, 24 and 25. You said there is no major change in the BFM market focus. However, your sales plan for fiscal 2025 has been revised upwards, 100 billion yen. But this time you have revised your sales focus more than 100 billion billion yen because of the positive impact of WM market growth. Do you get some advantage from this kind of market trend? I think both of them have some impact.

A question regarding the revision of your planned 'twenty four and 'twenty five.

Speaker Change #173: You didn't you set there is no major change in Wi Fi market forecast. However, your sales plan for.

Speaker Change #173: Fiscal 2025 has been revised upward 100 billion yen.

Speaker Change #174: And youth.

Speaker Change #175: But this time you have revised your cell, it's focused more than slightly more than 100, bts because subsidy.

Speaker Change #176: Positive impacts of WT market's growth.

Speaker Change #177: So you'll get some advantage from this kind of market trends.

Speaker Change #178: And I think both of them.

Speaker Change #178: Huh.

Some impact.

Speaker Change #178: That's the reason why we have revised balance sales focus slightly.

Unknown Executive: That's the reason why we have revised our sales focus slightly upward. I have fuller question, the sales in China. I want to get some clarification for class quarter and second quarter. The proportion of China remains unchanged. Then 50% a bit in the first half and 30% in the second half of this year. So when you look at this fiscal year, next fiscal year for abstract year, are there any trend increasing trend or increasing trend rather than proportion? I want to know about the second quarter. Up to until the end of this year, 40% will remain unchanged.

Speaker Change #178: Upwards.

Paul: Paul a question the silencing, China I want to get some clarification.

For last quarter and second quarter.

Paul: The accomplishment the proportion of China remain unchanged is that correct then 50% of it.

Speaker Change #180: In the first half and 30%.

Speaker Change #180: In the second half of this year.

Speaker Change #181: So when you look at Cisco in our next fiscal year will object here are there any trend increasing trend or decreasing trend.

Speaker Change #182: Rather than propulsion.

And I also want to know about the second quarter.

Speaker Change #182: Up to until the end of this year, 40%.

Speaker Change #182: We will maintain.

Speaker Change #182: So second quarter in digital.

Unknown Executive: So second quarter, it depends on the timing of delivery. Having set that as for the peak. The first quarter in this fiscal year, keep the peak. I think we are a little bit behind the market in two vendors. A little by little, the proportion goes down little by little in China. As I said earlier, the third quarter is still in China proportion. This is about 40% of all, but in the third quarter, the China Propulsion will go down to the third percent, or above. For next fiscal year, the Propulsion goes down, compared with the Propulsion of China for this fiscal year, because of industrial application investment, will be decreased to some extent.

Speaker Change #183: Second quarter it depends on the timing of delivery.

Speaker Change #183: Having setback.

Speaker Change #183: For the peak.

Speaker Change #183: The first quarter in this fiscal year the peak.

Speaker Change #183: I think we will be behind the amount in two vendors.

Speaker Change #183: But little by little the propulsion goes down we told biodiesel with China.

Speaker Change #183: As I said earlier.

Speaker Change #183: The third quarter still China propulsion.

Speaker Change #183: Is around 40% of all but in the third fourth quarter as China proportion will go down to the 30% level.

Speaker Change #183: So next fiscal year.

Speaker Change #183: The proportion goes down compared with the proportion of China for this fiscal year because of industrial application investment.

Speaker Change #183: We will be decreased to some extent.

Speaker Change #183: The amount of the sales to China will show an expected to decline.

Unknown Executive: The amount of the sales to China was so expected to decline. Let me add one more comment. For next fiscal year, we haven't issued our guidance yet. However, based on customer's investment, our current focus is that the China investment next year will be smaller than this year, although we didn't issue any guidance for next fiscal year.

Speaker Change #183: Let me add one more comment for next fiscal year, we havent issue our guidance yet however.

Mikio Hirakawa: Let me add one more comment. For next fiscal year, we haven't issued our guidance yet. However, based on customer's investment, our current focus is that the China investment next year will be smaller than this year, although we didn't issued any guidance for next fiscal year.

Speaker Change #183: However, based on customers in this month, our current forecast is that the China ambitions next year will be smaller than this year, although we didn't issue any guidance for next fiscal year.

Speaker Change #184: Next question escaping blank checks.

Unknown Executive: Next question is given by tax. The firm law fork from Moose Trade Research. One of your measure US logic customers plan to reduce cap expending by close to 20% next year versus 2024.

Unknown Executive: Next question is given by tax. The firm law fork from Moose Trade Research. One of your measure US logic customers plan to reduce cap expending by close to 20% next year versus 2024. Do you expect your other customers in needing edge logic to increase spending enough to still draw strong growth in the transphobic revenue smoke here? For next fiscal year, investment for logic is expected. So it's not related to customers, but as we said in my presentation, investment for AI-related devices, not only several, but also PC and smartphone will have AI function, and that investment will start.

Paul: No Paul from New Street research.

Speaker Change #185: One of your major U S logic customers plan to reduce capex spending by close to 20% next year versus 2024 do you expect your auto customers and leading edge logic to increase spending enough to still drive strong growth in advanced logic revenues moves here.

Toshiki Kawai: Do you expect your other customers in needing edge logic to increase spending enough to still draw strong growth in the transphobic revenue smoke here? For next fiscal year, investment for logic is expected. So it's not related to customers, but as we said in my presentation, investment for AI-related devices, not only several, but also PC and smartphone will have AI function, and that investment will start. So customers, utilization ratio for smartphone and PC has been increasing, so they need to purchase process to otherwise you are not able to satisfy the demands.

Speaker Change #185: For next fiscal year.

Speaker Change #185: Investments will logic is expected.

Speaker Change #185: So it's not related to customer but.

Speaker Change #186: As we said in my presentation.

Speaker Change #187: Investment for AI related devices that only service, but also a PC and smartphone will have AI function.

Speaker Change #187: And that ambition will start.

Speaker Change #187: So customer.

Unknown Executive: So customers, utilization ratio for smartphone and PC has been increasing, so they need to purchase process to otherwise you are not able to satisfy the demands. Therefore, next year, we are expecting to receive strong empires. The amount will be more than this year. We have another question in text. The question is from Tamii Kisan, who is the lembi. Let me read out the question. What is driving the additional DVM revenue versus previous expectation versus last quarter? Quarter, yes, there has been some increase. So we have sales composition issued as our guidance, and in our presentation, in the previous quarter, we expected the themselves composition.

Speaker Change #188: Utilization ratio.

Speaker Change #188: Smartphone and PC has been increasing.

Speaker Change #188: They need to purchase.

Speaker Change #188: Chris There's two other life you are not able to satisfy the demand. Therefore next year, we are expecting to receive strong inquiries downloads will be more done this year.

Toshiki Kawai: Therefore, next year, we are expecting to receive strong empires. The amount will be more than this year.

Unknown Executive: We have another question in text.

Speaker Change #188: We have another question in fixed the question niche from Tony Chiesa.

Unknown Executive: The question is from Tamii Kisan, who is the lembi, let me read out the question. What is driving the additional DVM revenue versus previous expectation versus last quarter? Quarter, yes, there has been some increase. So we have sales composition issued as our guidance, and in our presentation, in the previous quarter, we expected the themselves composition. The first half is 25%, and this time is 27%. We have revised upwards for the second half, 26% for the expectation, however, now we have revised upwards to 34% for the second half. So these are the figures we calculated based on the inquiries from the customers.

Tony Chiesa: But let me read out the question what is driving the additional DRAM revenues versus previous year.

Speaker Change #190: Fixation versus last quarter.

Speaker Change #191: Quarter, Yes, there has been some new chief.

Speaker Change #192: So we have felt competition issued guidance.

Speaker Change #192: And in our presentation.

Speaker Change #192: In the previous quarter.

Speaker Change #192: We expect that data himself the competition. The first half is 25% and this time, 27% we have revised upwards with the second half 'twenty, 6%, but the expectation however.

Kenji Yasui: The first half is 25%, and this time is 27%. We have revised upwards for the second half, 26% for the expectation; however, now we have revised upwards to 34% for the second half. So these are the figures we calculated based on the inquiries from the customers. Thank you very much for your question. Are there any other questions? We'd like to close the financial announcement. Before closing, I'd like to make an announcement. We'd like to continuously improve our IR activities based on your precious feedback. So we would appreciate your kind cooperation in filling out the question here before you exit the WebEx.

Speaker Change #192: Now we have revised upwards to 34% for the second half.

Speaker Change #193: So these are the few years.

Speaker Change #194: Is it based on the inquiries from the customers. Thank you very much for your question.

Unknown Executive: Thank you very much for your question. Are there any other questions?

Speaker Change #194: Are there any other questions.

Speaker Change #195: We'd like to close financial announcement before closing I'd like to make announcement, we plan to continuously improve our ion activities based on your precious fever.

Unknown Executive: We'd like to close financial announcement.

Unknown Executive: Before closing, I'd like to make announcement. We'd like to continuously improve our IR activities based on your precious feedback. So we would appreciate your kind cooperation in filling out the question here before you exit the WebEx. Thank you very much for taking time to join this conference despite your busy schedule today.

Speaker Change #195: So we appreciate your cooperation and getting out of the question you had before a webex.

Speaker Change #195: Webex. Thank you very much for taking time to join this conference. Despite your busy schedules today. Thank you very much.

Unknown Executive: Thank you very much.

Kenji Yasui: Thank you very much for taking time to join this conference despite your busy schedule today. Thank you very much.