Q2 2025 Tokyo Electron Ltd Earnings Call
Joining us today, despite your busy schedule.
I am yet to that <unk> been serving as the moderator for today's session.
I'd like to introduce today's attendee.
<unk> representative director President and CEO.
I am calling you solution.
Speaker Change: Next Mr. <unk> Sze kawamoto.
Speaker Change: Senior Vice President General Manager Division additional Finance Division.
Speaker Change: Yes.
Speaker Change: Before starting the presentation, let me explain the flow of today's session.
Speaker Change: First of all how long until and Carlyle made presentations after that until shift change. Upon time, we'll have a question answer session rarely entertain questions from the audience.
Speaker Change: This meeting uses two channels of Webex for the simultaneous interpretation between Japanese and English as we explained in our email your country requested to use up some Pcs or mobile terminals. If you plan to ask questions, but if you are not going to ask questions you can reach telephone.
Speaker Change: Since this conference is intended for institutional investors and analysts. We appreciate your understanding that we received questions only from institutional investors and analysts as usual.
Speaker Change: We will post the audio contents of this conference in Japanese and English on our website within a couple of days it will be appreciated.
Speaker Change: So visit our website now Mr kilometers will present, the consolidated financial summary in Chicago Dupree.
Speaker Change: Once again good afternoon, I am column with the Finance Division I plan to present, the consolidated financial summary of the second quarter of fiscal year ending March 2025.
Speaker Change: This slide shows quarterly financial summary.
Speaker Change: I will maybe even to the figures in the Blue box.
Speaker Change: In the second quarter, we generated net sales of $566 5 billion yen to 1% increase from the previous quarter.
Speaker Change: Gross profit by $259 9 billion and one 5% decline from the previous quarter gross profit margin was 45, 9% dropping by one seven percentage points due to one off inventory disposal and changes in product mix.
Speaker Change: Operating income was $148 1 billion and 10, 6% decline from the previous quarter operating margin was 26, 2% dropping by three seven percentage points from the previous quarter due to the decrease of the gross profit margin that I mentioned earlier, an increase obviously in <unk> <unk>.
Speaker Change: <unk> ratio, mainly including R&D expenses.
Speaker Change: Income before income taxes decreased by eight 2% to $153 6 billion net income attributable to owners of parent was $117 7 billion yen six 7% decline from the previous quarter.
The capex in the second quarter, mainly comprises development abilities sporting Tokyo electron.
Speaker Change: In total strong tissue, which are under construction right now.
Speaker Change: Okay.
Speaker Change: This is a graphic representation of the financial summary shown on the previous page on the grille neurological basis.
Speaker Change: As shown here net sales has been recovering after hitting bottom in the first half of the previous fiscal year.
Speaker Change: This shows the financial summary on the semi annual basis, because he is in the blue box on the financial results in the first half of this fiscal year.
Speaker Change: The fall line column shows the financial estimates for the first half of this fiscal year, we announced.
Speaker Change: On August eight.
Speaker Change: As you can see here in every idea we have achieved the guidance we announced on August eight.
Speaker Change: In comparison with the second half of the previous fiscal year, we generated more net sales and profit driven by strong customer demand.
Speaker Change: Compared to the first half of the previous year, our financial performance has grown significantly along with the recovery of our customers' spending.
Speaker Change: Net sales in the fast half of this fiscal year hit the second highest level on the half year basis.
Speaker Change: This shows SBU equipment sales by application.
Speaker Change: In the second quarter from the bottom of this chart.
Sales to non memory customers accounted for 71% non block I may only accounted for 3% and DRAM accounted for 26%. The competition is comparable with study in the previous quarter.
Speaker Change: The new equipment sale of slippage dropped in this quarter, partly because resubmission that some sellers was pulled forward to would you pay this quarter.
Speaker Change: Inquiries from our customers. However, it remains strong.
Speaker Change: Okay.
Speaker Change: This slide shows the field solution sales in the second quarter Fleet solutions sales were $139 5 billion, increasing by $21 4 billion yen driven lie modification also sales of parts and services rose along with the recovery.
Speaker Change: Utilization baked into customers.
Speaker Change: This slide shows net sales by region in.
Speaker Change: In the second quarter proportion of China dropped by eight six percentage points to 41, 3%.
Speaker Change: Proportions of the other regions generally showed an EP.
Speaker Change: Proportion of China is expected to decline from the first half to the second half of this fiscal year.
Speaker Change: This slide shows balance sheet, the total assets were two or three.
Speaker Change: $517 8 billion yen cash and cash equivalents were $525 5 billion rising by 87 <unk> from the previous quarter.
Speaker Change: Notes and accounts receivable was $371 7 billion, increasing by $12 8 billion quarter over quarter.
Speaker Change: Inventories were $742 2 billion yen declining by $22 five getting NIM from the previous quarter.
Speaker Change: Investment and other assets were 386 5 billion declining by $84 9 billion from the previous quarter because of such factors as decreased market value of shares we own.
Speaker Change: For liabilities then net adds it's shown in the Red can find liabilities were $719 4 billion decreasing by three <unk> NIM from the previous quarter.
Speaker Change: Net assets were one <unk> $798 3 billion yen, increasing by $25 3 billion from the previous quarter. This change is primarily attributed to the increase of asset due to the conditions net sales and decrease of assets due to the decline of other securities valuation difference.
Speaker Change: The equity ratio was 78% for your information.
Speaker Change: This slide shows the cash flow the cash flow from operating activities in the second quarter. It was 148.
Speaker Change: Yes.
Speaker Change: The cash outflow from investing activities was $54 4 billion yen, mainly due to acquisition of fixed assets.
Cash outflows from financing activities was $600 million, if free cash flow was $94 1 billion yen.
Speaker Change: This concludes my presentation on the consolidated final summary of the second quarter of the fiscal year ending March 2025.
Speaker Change: Now Mr. <unk> will present, the business environment and financial estimates.
Speaker Change: Mr Call IP.
Speaker Change: This is Kelly I will present business environment in financial estimates. Thank you so much for joining us despite your very busy schedule.
Speaker Change: I will present business environment and financial estimates.
Speaker Change: Let me start with business environment.
Speaker Change: We expect to call into 'twenty to make a <unk> market will be 100 billion plus dollars in science generally expected in August 2024, the partially customers investment by the bank. What it has been slow thanks to the support of more overwhelming strong AI demands Wi Fi market is gaining momentum.
Speaker Change: The thing divisional guidance, our present customers continue active investment for AI servers capital spending for AI service accounts for about 15% in the entire WP spending drilling as much as one five times year over year about half of that is for HBM obligations.
In parallel customers are activating advanced investment to prepare for full fledged split of AI market Pcs and smartphones, which also accounts for about 15% in W. W.
Speaker Change: <unk> investment driven by extremely robust AI demand investment for DRAM in particular for HCN is very very <unk>.
In advanced logic foundry in addition to the investment for scaling through four nanometers, we meter and two nanometer node investment for the mass production.
Speaker Change: Advanced packaging and testing needs are growing rapidly.
Speaker Change: In calendar 2025, and you mentioned to a strong demand for AI servers AI content in PC and smartphone is expected to grow all the proportion of tools for AI semiconductors will go up to 40% in DWP market.
Speaker Change: One.
Research companies state proportion of AI semiconductor in the semiconductor devices will grow to 70%.
Speaker Change: And accordingly, and our presence will also rise gradually is inevitably a fee market.
Speaker Change: Following the recovery of investment for DRAM investments will NAND is also expected to resume as the inventory adjustment proceed.
Speaker Change: A further recovery of WP spending in advanced logic foundry is expected to offset the low investment for mature nodes.
Speaker Change: We expect that these factors will drive double digit growth in calendar 2025 of their fee market.
Speaker Change: AI applications cutting edge semiconductor technologies, the essence shop.
Speaker Change: Towards the realization of semiconductor devices, featuring nice capacity at a high speed and low power consumption took note of innovation is murdered for it.
Speaker Change: Long with evaluation of such technologies at GAA that stat, Pvs and high stock gain memories are ambitious opportunity will expand in one more.
Speaker Change: This shows business progress in second quarter of fiscal year, ending March 2025.
Speaker Change: Regarding financial performance.
As Mr. Cola presented earlier net sales profit and all other indicators achieved our guidance.
Speaker Change: Towards full implementation of the investment for high volume manufacturing advanced devices, we are receiving increasing inquiries with tools for advanced logic DRAM for HBM and advanced packaging, which pushes up the proportion of our youth products. This trend is expected to raise our full year.
Speaker Change: Net sales and profit to a record high.
Speaker Change: I will show you an entire fixture later we studied in <unk>. These are high value added strategic products in this fiscal year as well.
Speaker Change: We have one.
Speaker Change: With high K film deposition system for DRAM capacitor and also single warehouse cleaning system Lucentis, Paul Chambers for NAND, featuring high control ability and productivity for Boulder.
Speaker Change: Which I expect it to more in the future we have <unk> fill new customer with temporary bonder hvem's for which we have already gained high market share among the major customers. Another highlight digital we have wound <unk> fusion window for backside PD and used in advanced logic and ditto.
Speaker Change: <unk> issued chief in advanced packaging.
Speaker Change: For the progress we have an overwhelming share in advanced logic customers and <unk> is growing rapidly and likely to be doubled year over year, we have one high volume manufacturing pool with program for <unk>.
Speaker Change: Well because of its advantage in temperature control ability from a major customer in this fiscal year will acquire itching, which attract attention in the market. We have confirmed a citizens progress toward high volume manufacturing.
Speaker Change: At multiple customers.
This diagram shows forecast data presented by Tech insights, which represents science of CWC markets and test and assembly market.
Speaker Change: As shown here, both Wi Fi and test Assembly markets expected to grow strongly.
Speaker Change: And it is AI and advanced devices that drive this growth.
Speaker Change: Development items shown on the right can slide are currently underway, leading etch wrap up process tools to the delivered a massive podium and tools for advanced packaging and testing, which are rapidly growing in both of these two fields. We have significant number of high volume manufacturing <unk> and development people.
Speaker Change: <unk>, well, which will provide us with growth potential for the future.
Speaker Change: In this fiscal year AIB dated sales alone will be more than 600 billion yen by leveraging our broad product portfolio, we will embrace growth potential as much as possible in both skating and packaging.
Speaker Change: Tori that shipment the midterm management plan, our business is advancing steady right now.
Speaker Change: In next fiscal year, we expect deprecation shown in the table, we will account for about 70% of our sales.
Speaker Change: We will hold IR February 26 2025.
Speaker Change: We'd like to talk about <unk> growth potential we will announce more detail about disadvantaged.
Speaker Change: Please join US in this event next I will present, the financial estimates for fiscal 2025.
Speaker Change: As I described earlier driven by the strong demand, we will add related devices Wi Fi market is currently recovery towards cutting their 2025 full fledged WP spendings are expected to spot was once mainly in advanced logic.
Speaker Change: We have relaunched the financial estimate upward by reflecting first half results and latest market trends fiscal 2025 full year net sales estimates are two trillion 400 billion yen, which represents 31% positive growth year over year.
We expect to considerably outperformed the market growth.
We estimate one $3 129 building meaningful gross profit 680 billion for operating income.
Speaker Change: And 526 billion for net income attributable to owners of pairing.
Speaker Change: In order to capture future growth opportunities as much as possible.
Speaker Change: We plan to invest 254 billion yen for R&D.
Net sales gross profit gross profit margin operating income net income and EPS are expected to ship record high.
Speaker Change: This slide shows sbe, new equipment sales forecast in fiscal 2025.
Speaker Change: As shown here sales are recovering after bottoming out in the first half of previous fiscal year for the second half of the Cisco yet.
Speaker Change: We expect record high half year.
Speaker Change: This shows our planned for R&D expenses and Capex.
Speaker Change: In fiscal 2025 as presented before we expect R&D expenses of 254 billion yen Capex with 170 billion yen and depreciation of 63 billion yen all of which I expect it to hit record high.
Speaker Change: This slide shows the dividend forecast.
Speaker Change: Based on the division in fiscal 2020 financial estimate the full year dividend per share is expected to be 571 yen, surpassing the record posted in the fiscal year ended March 2023.
Speaker Change: In the board of Directors meeting held today, we've decided to implement share repurchase of up to 70 billion yen.
In February 2024th we announced our plan to spend R&D expenses were one five trillion and Capex of 700 billion yen for five years to come starting from this fiscal year.
Speaker Change: This share repurchase has been decided by comprehensively taken into account various factors, including investments for our expected growth beyond next fiscal year enhancements of our cash generation ability and our cash position as well as improvements of capital efficiency.
Looking ahead towards our expanding business opportunities cash generation ability and cash efficiency improvement, we are going to manage balance sheet flexibility.
Speaker Change: This is my last slide showing portal return amount over the past few years. The total reached an amount in this fiscal year totaling the dividend per share and additional share repurchase that I presented earlier is expected to be $413 9 billion yen, establishing a new record, beating the record in the previous.
Fiscal year ended March 2024 by more than 100 billion yen.
Speaker Change: We are planning to essentially cancel the shares we plan to repurchase units this fiscal year.
Speaker Change: Thank you very much this concludes my presentation.
Speaker Change: Yes.
Speaker Change: We will have <unk>.
Question and answer efficient until six therapies, Japan time.
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Speaker Change: I mean, the passion, who asked the question one by one or surface areas, we will construct sutent in fab four please check the webex jackpot.
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Speaker Change: I'll refrain from answering questions is your name more southeast Asian, knowing that given on Japanese channel will translate into English question and I'll read it out in Japanese and speakers will answer in Japanese and English channel Cushing asset won't be simultaneously interpreted into English on the real time basis.
Speaker Change: As we would like to take questions from as many participants as possible. We will take one question per person. If time allows we will take additional questions.
No. The first question is from.
Speaker Change: Yoshioka from Nomura Securities.
Yoshioka: Thank you very much.
Yoshioka: So I have one question.
One question per person is that correct.
Speaker Change: Thank you.
Speaker Change: Could you, let us know about.
Speaker Change: The Wi Fi market in 2025 and showed double digit growth is expected on page that team.
There's been no changes from the previous financial announcements in terms of the statement given however over the past few months there have been many changes I believe are there any changes in the degree of double digit growth was some nuance in the growth potential is the Wi Fi market.
Speaker Change: Thank you.
In principle.
Speaker Change: Double digit growth as expected.
Speaker Change: And we haven't changed our idea for calendar 2025, <unk> market logic is very strong.
Speaker Change: <unk> <unk>.
The reimbursement for memory, especially for HBM.
It has been growing significantly.
Speaker Change: So leading edge logic, almost the same level of investment is expected.
Speaker Change: As this year.
Speaker Change: And for DRAM.
Speaker Change: Memory area.
Speaker Change: The investment is expected to grow further more for HBM. In this month is expected to grow NAND investment is also recovering because of those factors double digit growth as expected.
Speaker Change: The proportion between the logic and mentally us seven to three but next year the proportion should be six to four.
Speaker Change: <unk> memory proportion will go up next year.
Speaker Change: So <unk> is almost comparable to this year, but obviously you spend incrementally increases as a result publishing between logic and memory will become <unk> for next year. That's the reason why I expect double digit growth next year.
Speaker Change: Thank you very much bye.
Speaker Change: By application I understand your point about what about China, How would you view the China market next year, what proportion of China will be changing.
How do you think about that.
Speaker Change: For Wi Fi as a whole.
Speaker Change: The China proportion is expected to decline to the 30% level.
Speaker Change: So in the second half of this fiscal year.
It's below 40%.
Speaker Change: But next fiscal year at the China proportion should be about 30% getting going back duty.
Speaker Change: Previous level.
Speaker Change: There are two reasons number one the leading edge investment.
Speaker Change: Is increasing that's one thing number two.
Speaker Change: And many new emerging customers in China are now.
Speaker Change: Focusing on enhancement of <unk>, rather than investing full capacity enhancement.
Speaker Change: Because of those two reasons, China proportion will be declining I think competitors are.
Having very similar views on China, So maybe the proportion of China will become about 30% next year.
Speaker Change: Thank you very much.
Speaker Change: Thank you very much for your answer.
Speaker Change: Mr. <unk> I. Thank you very much for your question next question is from Mr. Yoshida of CLSA Securities Mr. Yoshida upbeat.
Speaker Change: And you should FMC and <unk> securities. Thank you very much.
Speaker Change: For SCE new equipment sales.
Speaker Change: Your company of Outgrowing DWP market, which product is driving your.
Speaker Change: Good performance and next month, you said youre, winning <unk> and.
Speaker Change: So mix will be shifting to mentally so by products what is the driver.
Speaker Change: I wonder there might be some changes in driver byproduct.
Speaker Change: I won't use to give us information about driver for this year and next year in terms of product Fortunately.
Speaker Change: It's scaling.
Speaker Change: In patterning.
And packaging.
Speaker Change: And testing.
Speaker Change: In those areas, our company's product portfolio.
Speaker Change: It's rather.
Speaker Change: Growing.
Speaker Change: From page.
Speaker Change: This slide showing the data from tap insights.
Speaker Change: So by obligation shown over here the quarter developer.
Speaker Change: Cheng system film deposition systems and cleaning system is areas are.
Speaker Change: <unk> delivered a massive audience and they are really especially for HBM.
Speaker Change: Applications.
Speaker Change: This is high volume zone.
Speaker Change: Including HBM and AI related.
Speaker Change: Advanced logic.
Speaker Change: For DRAM.
Speaker Change: TD are fine. So these area are showing that.
Speaker Change: Well.
Speaker Change: So testing and assembly market on the other hand, compared with Wi Fi market.
Speaker Change: Of the <unk> in assembly market is smaller in size the blue squares in the right table there.
Speaker Change: Resenting test and assembly the purple squares.
Speaker Change: Also Wi Fi market related equipment.
Speaker Change: So testing and assembly process.
Speaker Change: You can see twin certain piecing the bonding and progress.
Long.
Speaker Change: Compared to the previous year, we can see the increase.
More than 100 billion yen actually to growth is almost doubled in this fiscal year contributing to record high results, so appropriately the progress and numbers.
Speaker Change: Compared with the exposure to the entire market rather small therefore.
Speaker Change: At June <unk>.
<unk> and film to putting systems in their applications, which product is growing most next year are there any changes in terms of driver.
Speaker Change: So it depends on the market size.
Speaker Change: For X gene.
This is a big portion.
GAA nano sheets.
Speaker Change: Investment is expected to grow next year OLED started this year.
Speaker Change: So you can expect.
Speaker Change: The investment more and maybe two years from now the forklift investments will start for two nanometer and itching grow Furthermore quarter double of our best on the high market share I think it gives a strong growing and fulfillment deposition system.
We are winning are steadily.
Speaker Change: Sure.
Speaker Change: So these are the current conditions.
So for those applications shown on this page.
Speaker Change: The Dol.
Speaker Change: Yes.
Speaker Change: Blue portion that representative examples and they are related to our application and we have started evaluation of those applications together with our customers. This area.
Speaker Change: We will become provide 2025, it accounts for 70% or more than 70%.
Speaker Change: So the product portfolio over here.
Drive our growth potential is just that would like to understand the situation as you can see.
Speaker Change: Okay.
Yes.
Speaker Change: Diversified media products.
Speaker Change: Our delivered by our company and for packaging bonding.
Testing <unk> <unk> are growing steadily as well. Thank you very much. Thank you very much for your question. Mr. Yoshida. Thank you very much for your question.
Speaker Change: Next question is from.
Speaker Change: Mr. Nakamura from Goldman Sachs, Japan, Mr. Nakamura. Please. Thank you very much. This is knock on Luna can you hear me, yes, I can hear you well.
So earlier, Mr. <unk> said.
Speaker Change: Your sales to China will be declining in proportion from the fit first half to the second half of this fiscal year 46, 6% should be the actual proportion of China in the first half of this fiscal year, what is the percentage or proportion of China in second half of this year.
Speaker Change: <unk> next year.
Speaker Change: So how about this episode its value of sales to China for Cisco in acquisition, you ideally honestly.
Carla: So this is Carla model, let me answer to your question.
Speaker Change: The first half of your question in the first quarter.
Speaker Change: <unk> had a very high proportion.
Speaker Change: Sales to China by second quarter.
Speaker Change: Maybe declined so 45% should be the proportion of China in the past half of the Cisco yet as you said earlier for the second half of this fiscal year as <unk> said earlier.
Speaker Change: The proportion of China will go down to the 30% level.
Speaker Change: For next fiscal year again, as I said earlier.
Speaker Change: The leading edge with advanced smooth both increase.
Speaker Change: So proportionally that Mr kinds of law for the China customers.
Speaker Change: Therefore, the proportion of China sales will go down to 30% the previous year.
Speaker Change: For the first half of this fiscal year, the China propulsion should be.
Speaker Change: 45% the second half will decline by nearly 10% and next fiscal year.
Speaker Change: Further decline as expected so the China proportional will go down to the 30% level in next fiscal year.
Speaker Change: The investments will advance it.
Speaker Change: Node, including investment or two nanometer.
Speaker Change: And investment for two nanometer will start in the footprints of monarch two years from now.
Speaker Change: Four.
Speaker Change: The China proportion will go down to the 30% level. Thank you very much I have one follow up question for this fiscal year.
Speaker Change: Now you have revised yourself focus by 100 billion yen.
Speaker Change: So what is the proportion between China sales to China and sales to other regions.
Speaker Change: In your upward revision that sounds logic area.
Speaker Change: We have additional inquiries in the field of advanced logic on the other hand.
Speaker Change: So there are.
Speaker Change: Some revision of the customers like phone.
Speaker Change: Devices.
Speaker Change: The proportion between advanced nodes and mature to be 50 50.
Speaker Change: Yes.
Speaker Change: The factors.
Rich.
Speaker Change: Nate made us to revise our estimate onward. Thank you very much Mr. Nagano Nakamura. This question is from Mr. ASC of UV.
Securities Mr. <unk>. Please.
Speaker Change: <unk> of UBS Securities. Once again I have one question for the second half of this year, you'll have a planned 47, 3% of the gross profit margin on the other hand, China proportion goes down I think the China sales feature high profitability.
Speaker Change: The gross profit margin goes up also the China proportion of those done in the second half of this fiscal year.
Speaker Change: So D as.
Speaker Change: As I said earlier in my presentation, the leading edge area.
Speaker Change: The high value added area.
Speaker Change: Businesses are growing steadily.
Speaker Change: As I said earlier in my presentation.
So.
Speaker Change: We have some advantage in that area.
Speaker Change: And that foundation recognized by the customer and we can provide high value added to the customer. That's the reason why the gross profit margin goes up.
Speaker Change: In Nols.
Speaker Change: HBM logic.
Speaker Change: And packaging and testing.
Speaker Change: In these areas.
Speaker Change: The technology advancement is going wrong and accordingly, our technology advantage is recognized and that leads to high value added products of our products.
Speaker Change: And the main driver.
Speaker Change: In <unk>.
Speaker Change: Because of high value, we can provide both the proportion of China.
Speaker Change: We are able to increase gross profit margin in the second half of this fiscal year I have one additional comment from the first quarter to second quarter. The gross profit margin goes down went down because of the product mix. So we have high market share.
Speaker Change: <unk> foods gross profit margin is rather harsh that proportion goes down another one is one off.
Speaker Change: Inventory disposal because of that.
Speaker Change: Gross profit margin goes down from the first quarter to second quarter. So this measure basis.
We are just talking about discipline.
Speaker Change: Second half of this year.
Speaker Change: Question is about the yes, if I wanted to know both for the second half of this year and the difference between first quarter and second quarter.
So.
Speaker Change: Dave lesion exchanges, but because of the product mix you can see some improvement therefore for this fiscal year. The gross profit margin is planned next year.
Speaker Change: Here you may see further increase in gross profit margin.
Speaker Change: Or do you think there is no change in gross profit margin next year.
I think if.
Speaker Change: If we can keep balanced business and we are doing business in a balanced manner through 2027.
Speaker Change: Fiscal year March is three trillion and while more is to be achieved in fiscal year ending March 2027.
<unk>, 75% or more and 30% or more that part of our midterm management plan.
Speaker Change: The new <unk>, New pro Dex.
Speaker Change: Progress in this fiscal year.
Speaker Change: We will help us to improve our business performance.
Speaker Change: Silicon at ULA launch for high volume production. In addition to 70% that I mentioned earlier.
Speaker Change: So we have a steady progress towards that shipments of the midterm management plan.
Speaker Change: So this is how our business is going on.
Speaker Change: In a balanced manner.
Speaker Change: Semi conductor manufacturing.
Industry.
Speaker Change: Is capitalized by the very rapid changes, but very fast technology innovation.
Speaker Change: We need to continuously have the world's leading technology innovation. That's the reason why we are investing more than one five trillion yen for R&D and 700 <unk> Daniel Moore.
Speaker Change: Capex for five years to come we are going to implement those five year plan steadily for R&D expenses trend capex. Thank you very much.
Speaker Change: Thank you very much Mr. Yossi for your question next question is from.
Speaker Change: Mr. Walter <unk> of Morgan Stanley.
Speaker Change: USG research Japan.
Speaker Change: For next fiscal year.
So.
Speaker Change: It depends on China, We don't know what happens next year, depending on China installation by 2025.
The China <unk> market growth what is your assumption for memory and non memory, especially for memory I think I saw the similar thing in Cook side of the extra week. Many of these customers are putting forward orders. So they have some concerns for next fiscal year's performance So China.
Speaker Change: As a whole.
Speaker Change: What sort of growth do you expect in China in WP market and what is the breakdown between memory and non memory.
Speaker Change: There are numerous customers in China.
Speaker Change: Therefore in my mind, there's no breakdown between memory and non memory.
Speaker Change: But when it comes to China sales on <unk> market in China.
Speaker Change: The China market is expected to decline.
Speaker Change: You said earlier Wi Fi market shows double digit growth quality proportion of China will go down by 40% that means Chinese market will decline by 20% is that correct.
Speaker Change: I don't think 20% so I think decreased by double digits, that's our expectation for China market.
Speaker Change: So I have one follow up question. This forecast is based on the export control by the American government, how would you factor in the export control.
Speaker Change: So a geopolitical issue and regulations are to be watched closely.
Speaker Change: Desktop I always say.
Speaker Change: Already.
Speaker Change: There are various.
Speaker Change: Information coming in.
Speaker Change: Yeah.
Speaker Change: So the regulations will be imposed.
Speaker Change: And even after a regulation.
Speaker Change: Put inputs they need to get the permit for Medici.
Speaker Change: Shawn product, which we may get permits and debt as a multiple of that which we may not be able to get permits Gucci based on that assumption. We report those fears. Thank you very much that was very clear Mr. What actually thank you very much for your question next question is from Mr.
Speaker Change: <unk>.
Speaker Change: Securities.
Speaker Change: Mr hit our coffee and <unk>.
My question is very similar to the previous question second half of this fiscal year.
Speaker Change: So when you see the competition by application Iqos information for the past quarter. Our results I think there have been no changes.
Speaker Change: So I think.
Speaker Change: DRAM known brought that normally normally all of them are growing.
Speaker Change: January but by region.
Speaker Change: Which region is a major driver to make us revise your forecast upwards.
Speaker Change: A primary.
Speaker Change: Driver is Taiwan.
Speaker Change: So in terms of upper division of our estimates.
Speaker Change: The mature node customers in China.
Speaker Change: Our added.
Speaker Change: That our addition in the maturing with customer in China, but initial driver is the leading edge foundries.
Speaker Change: By region.
Speaker Change: One followed by Korea and China.
Speaker Change: Partially.
At stake.
Speaker Change: Yes.
Speaker Change: Including memory area advanced memory, and advanced logic as well.
The mature annuity China.
Speaker Change: The major drivers. Thank you very much tougher this year.
Speaker Change: And so he does I want to thank you very much for your question next.
Speaker Change: Next question is from Mr. Damien <unk> as.
Speaker Change: <unk> capital strategy pending assemblies.
Speaker Change: Gaming.
Speaker Change: Yes.
Speaker Change: On page eight.
Speaker Change: Yes.
Speaker Change: Now you can see field.
Speaker Change: <unk> solution sales for the second.
Speaker Change: You hit a record high.
Speaker Change: And google's queued up quarter over quarter and year over year, you can see addressing please what is the reason for this traffic increase and what will happen in the third quarter fourth quarter and next fiscal year are there any special huskers to raise the fill solution sales or no utilization.
Speaker Change: <unk> is increasing right now well advanced.
Speaker Change: So can you see some tailwind next year as well.
Yes.
Speaker Change: So as you pointed out in your question.
These customers fast feature higher utilization rate accordingly.
Speaker Change: The part sales has been growing steadily.
Speaker Change: Installed base is growing.
Speaker Change: And also the customer faster utilization rate is increasing because of these factors service.
Speaker Change: <unk> sales as well as the sales increase because of the growing installed base. So these are major reasons for the increase of the fuel solution sales.
Speaker Change: Thank you very much so at this level.
Speaker Change: Field solutions, South you said double digit growth is expected next fiscal year, including product and service, but when you just look at the service plus sort of growth rates do you expect for next fiscal year.
Speaker Change: So IR Department will answer to your question as of today.
Speaker Change: We don't working on next year's budget, but customers utilization ratio is improving especially for NAND.
Speaker Change: The first half of this this is call it <unk> <unk> <unk>.
Speaker Change: Ratio of non purchase is rather low.
Speaker Change: Following maybe the investment for <unk> will be doubled next year. Therefore, we can see growing install base. Accordingly utilization is increasing DRAM and also active and logic is also a very active but when it comes to mature node.
Speaker Change:
Speaker Change: Weak utilization rate will mature to Moon I hope this answers your question.
Speaker Change: So.
Speaker Change: You can see strong inquiries for the advanced logic and advanced memory, but when it comes to mature note you can see some slowing trend. So the growth rate expected for next year actually we haven't calculated the expected loss ratio who next year.
I have one follow up questions. We'll next fiscal year Chinese Wi Fi market is declining however, when it comes to surface.
Speaker Change: Tradition servicing China, the utilization ratio is expected to grow further more by improving yield rather than capacity enhancement.
Solution shows in China.
Speaker Change: Although <unk> market declined slightly.
Speaker Change: Possibility that gives relationships in China increase next year. This year, China is stronger because of the active investment by the emerging customers in China.
Speaker Change: And they are working on the yield enhancement and.
Speaker Change: And utilization ratio is not so high so when viewed is in house. We can expect a further increase in utilization ratio. However, we don't see such kind of trend yet among the Chinese emerging customers. Thank you very much.
Speaker Change: Thank you very much Daniel Thanks for your question.
Speaker Change: Next question.
Speaker Change: Mitch from Mr. Shimada of <unk> Securities.
Speaker Change: I am Shimada Gladstone Securities.
Speaker Change: <unk> W fee for 2025, the memory should be the swing factor in the previous meeting DRAM increases by 20%, 30% and none will be increasing.
Speaker Change: Two times do you have the same idea for DRAM and non steel now.
Speaker Change: For NAND.
At this DRAM and NAND market.
Speaker Change: Is rather small but none.
Speaker Change: Market is will be doubled.
Speaker Change: And DRAM growth as expected as well so as you said, we haven't changed our outlook for the market trend for DRAM in markets, We think give us some qualitative comments other than enhancing trend or a declining trend for NAND.
Speaker Change: I think the recovery might be delayed and <unk> into these kinds of trends in the market.
Speaker Change: Okay.
So far we haven't seen any significant changes I have one follow up question.
Speaker Change: For cryo itching.
Speaker Change: All are.
Speaker Change: So significant progress is achieved I want to know the typically slow difficult plus emerging what happens maybe can sell something let's sort of progress has been achieved for <unk>. How much sales do you expect for next year.
Speaker Change: If some sales cycles, a nice program hedging.
Speaker Change: Could you.
Speaker Change: Let us know whatever you can say now.
So multiple customers.
Speaker Change: And.
Speaker Change: Application.
Speaker Change: Of correction.
Speaker Change: Has been increasing slightly.
Speaker Change: So.
Speaker Change: The characteristic.
Speaker Change: Now being evaluated and verified right now.
Speaker Change: So if the customer can inch endure the desire attached risks maybe we can.
Speaker Change: Have a negotiation with the customer for the mass production people are 10 microns.
Speaker Change: Jeff can be etch screwed that Boeing will appear at the same time environmental performance, which is very important is really good we don't use carbon gas. So 400 linear will be introduced in the future then we will see more and more applications.
Speaker Change: Describe our aging.
Speaker Change: The issue is rather big.
Speaker Change: In area.
Speaker Change: The volume zone <unk> should be around 2026.
2025, the prior issue, we will have some contribution to ourselves, but voting zone will come in 2026 do we have any spec.
Speaker Change: Specific amount for defense of the market too early to say.
Speaker Change: Our reported figures in the past I believe.
The signs of the market, we haven't publicly announced any signs of the potential market that prior Ajay I'm, sorry, I'm sorry.
Speaker Change: As for the market size.
Speaker Change: Kevin.
Speaker Change: Presented and report.
So maybe you can see the drastic increase without any of the application. The priority has observed in the future, but one thing maybe maybe two years from now.
Speaker Change: <unk> will start contributing to our sales 2027 the market size.
Speaker Change: Is <unk>, that's what we said earlier.
Speaker Change: But that's two years from now so far we haven't changed our prospect drastically.
Speaker Change: Thank you very much.
Speaker Change: Mr Chairman, Michael Thank you very much for your question.
Speaker Change: Actually we have four more questions.
Speaker Change: For more people raising hand, I'd like Q2 limit your question to one per person.
Speaker Change: Next question is from Mr. Yamamoto from Mizuho Securities T. Cyber question regarding share repurchase.
So 18 billion yen and now we have additional 70 billion yen you said you have this flexible.
Speaker Change: <unk> the share repurchase and I think thats true.
Speaker Change: I don't think there is no major change in the policy of four.
Speaker Change: Share repurchase but are there any particular reason or trigger that you have decided to do some additional share repurchase and other any indicator.
Another share repurchase next fiscal year within.
Speaker Change: So now we are going to do the appropriate balance sheet management.
Speaker Change: That's why we always say.
Speaker Change: In particular.
Speaker Change: In terms of auto E around 30%.
Several of our Lee is our constant target.
Speaker Change: So that's part of ours.
Speaker Change: Constellation to despite the additional repurchase of shares of course, we are watching the market trend.
Speaker Change: Our cash position as well as I E.
Speaker Change: About 30%.
So we are doing.
Speaker Change: The share repurchase so that we can achieve.
Speaker Change: Only about 30%. Thank you very much Mr. Yamamoto. Thank you very much for your question next question is from.
Speaker Change: Mr Han.
Well.
Speaker Change: SMB Nikko Securities can Hindi and Gaiam Henry here.
Speaker Change: The Taiwan is really strong and knew that but other advanced logic.
Speaker Change: <unk> not doing so well.
Speaker Change: I mean, those circumstances ASML has revised their forecast for next year downward.
Speaker Change: You have 100% market share for UV does the downward revision of ASM sales piece.
Speaker Change: He's going to have some negative impact on your financial estimate for you next year.
Speaker Change: As far as we are concerned.
Speaker Change: We.
Speaker Change: Our orders are increasing steadily.
Speaker Change: Therefore in terms of quarter double whopper.
Speaker Change: There have been new measures changes.
Speaker Change: In quarter double of our business.
Speaker Change: And there is no big volatility volatility in our business quarter in the blocker that business is growing.
Speaker Change: Mr. <unk>, we have additional comments for next fiscal year.
Speaker Change: And not all driver, especially DRAM for scaling so not only <unk>, but also.
Speaker Change: Is this a immersion lithography demand is increasing so not only <unk>, but also the measurement. So that we do have high market share. According in accordance with the market growth our sales expected to grow next year steadily.
Speaker Change: Mr. <unk>. Thank you very much for your question. Thank you very much.
Speaker Change: The last question.
Speaker Change: Is from Mr. Shabaneh of Citigroup global markets, Japan.
Speaker Change: Mr Shebang.
Speaker Change: Simple question just clarification.
Speaker Change: And very simple follow up for 2020 five.
Speaker Change: The market forecast.
Speaker Change: We use the same sentence.
Speaker Change: As the previous.
Speaker Change: Financial announcements, but how about reality there and changes you can just give me one word answer.
Speaker Change: City, you recall to detect insight information and strong growth is expected for the future. According to Mr. Calise understanding earlier. This year, you presented R&D expenses headcount enhancement and Capex.
Speaker Change: Enhancements you are going to increase it by one five times, but.
Speaker Change: Do you need further enhanced budget.
Speaker Change: For the future or do you just quote.
Michelle plan for R&D head count and Capex.
The business opportunity are expanding.
Speaker Change: He served available market is growing right now.
Speaker Change: So we are.
Speaker Change: Kevin Great opportunities in the first month five stadium or more was 700 it is no more.
Speaker Change: Expenses, so we cannot give you any quantitative.
Speaker Change: Additional expenses for R&D expenses, and Capex as of today, but we may be more expenses for R&D and Capex.
Speaker Change: And we are now preparing the plan for the future with Wi Fi market forecast.
Speaker Change: <unk> growth is expected for next year page that gene shows some information.
Speaker Change: Sure.
Speaker Change: Servers investment.
Speaker Change: The proportion of that.
For next year.
Speaker Change: Comps were 20% in total Debbie.
Speaker Change: And AI amounted Pcs and smartphones also cancel 20% within <unk> market and conventional.
Speaker Change: PC is unconditional.
Speaker Change: Smartphones accounts was 30%.
So these are the major drivers for the C F, 15%, 15% and 35% therefore, 65% are driven from the leading edge node, but next year that 65% will be increased to 70%, especially driven by AIG to Egypt, we mapped.
Speaker Change: So the market itself is expected to grow.
Speaker Change: On the double digit basis.
Speaker Change: But AI related servers, and Pcs and smartphones expect it to grow. Furthermore.
Speaker Change: In the future.
Speaker Change: As expected grow. Furthermore.
According to our perspective, there have been no major changes in our idea for it.
Speaker Change: Future market trends.
Speaker Change: So.
Speaker Change: There have been no major changes from the previous.
Speaker Change: Finish us announcement.
Speaker Change: Yes, that's correct. Thank you.
Speaker Change: On the new area. We are winning are neutral we have started some evaluation. Therefore, we are making steady progress towards the midterm management plan.
Speaker Change: Especially I don't thank you very much for your question.
Speaker Change: Time to close the financial.
Speaker Change: Announcements.
Speaker Change: Before closing, however, I'd like to make one announcements as call ice you announced in his presentation, we will hold IRR.
Speaker Change: Day at four o'clock in the afternoon of February 26th Wednesday, 2025, and this event, we plan to present, our business opportunities expanding long listed local geography, and test assembly tools market, our initiative embraced opportunities as much as possible. So we like very much.
Speaker Change: Appreciate your participation we will inform you of the details of this later, we'd like to continuously improve our R&D activity.
Speaker Change: IR activities based on your ambitious feedback. So appreciate you are kind of power corporation in filling out the questionnaire before we accept a webex. Thank you very much for taking time to join this comprehensive dispatch or is your schedule.
Speaker Change: March.