Q1 2026 Tokyo Electron Ltd Earnings Call

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

Yatsuda: March 2026. Thank you very much for joining us today despite a busy schedule. I'm Yatsuda of IR Department, serving as a moderator for today's session. Let me introduce today's attendees: Toshiki Kawai, Representative Director, President, and CEO. I am Kawai. Thank you very much. Next, Hiroshi Kawamoto, Senior Vice President, General Manager, Division Officer of Finance Division. I am Kawamoto. Thank you very much for joining us today. Before starting 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 PM Japan time, we will have a question-and-answer session where we entertain questions from the audience. This meeting uses two channels of Webex for the simultaneous interpretation between Japanese and English.

Koichi Yatsuda: March 2026. Thank you very much for joining us today despite a busy schedule. I'm Yatsuda of IR Department, serving as a moderator for today's session. Let me introduce today's attendees: Toshiki Kawai, Representative Director, President, and CEO. I am Kawai. Thank you very much. Next, Hiroshi Kawamoto, Senior Vice President, General Manager, Division Officer of Finance Division. I am Kawamoto. Thank you very much for joining us today. Before starting 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 PM Japan time, we will have a question-and-answer session where we entertain questions from the audience. This meeting uses two channels of Webex for the simultaneous interpretation between Japanese and English.

I'm yet to the IR department, serving as a moderator for today's session.

Let me introduce today's attendees.

Toshiki Qawi representative director President and CEO.

I am Cali. Thank you very much next Hiroshi Kawamoto Senior Vice President and General manager Division of the Finance Division I am color model. Thank you very much for joining us today.

Before starting the presentation, let me explain the flow of today's session.

Festival Kawamoto and go away will make presentations.

After that until 630 P. M. Japan time, we will have a question on the nacelle session really entertain questions from the audience. This meeting users to China was a webex for the simultaneous interpretation between Japanese and English as we explained in our E Mail you a country requested to use up some pcs or mobile terminals.

Yatsuda: As we explained in our email, your country requested to use apps on PCs or mobile terminals if you plan to ask questions, but if you are not going to ask questions, you can use telephones. Since this conference is intended for institutional investors and analysts, we'd like to appreciate your understanding that we receive questions only from institutional investors and analysts, as usual. 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 website. Now, Mr. Kawamoto will present the consolidated financial summary. Kawamoto-san, please. Good afternoon. I am Kawamoto, finance division. I'd like to present the consolidated financial summary of Q1 of the fiscal year ending March 2026. This slide shows the quarterly financial summary.

Koichi Yatsuda: As we explained in our email, your country requested to use apps on PCs or mobile terminals if you plan to ask questions, but if you are not going to ask questions, you can use telephones. Since this conference is intended for institutional investors and analysts, we'd like to appreciate your understanding that we receive questions only from institutional investors and analysts, as usual. 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 website. Now, Mr. Kawamoto will present the consolidated financial summary. Kawamoto-san, please. Good afternoon. I am Kawamoto, finance division. I'd like to present the consolidated financial summary of Q1 of the fiscal year ending March 2026. This slide shows the quarterly financial summary.

If you plan to ask questions, but if you are not going to ask questions you can use telephones.

Since this conference is intended for institutional investors and analysts with like I. Appreciate you understanding that we received questions only from institutional investors and analysts as usual.

We will post the audio contents of this conference in Japanese and English on our best that within a couple of days it would be appreciated. If you could also visit our website now Mr. Cola motto will present, the consolidated financial summary.

Those are some fleets.

Good afternoon, I am Kawamoto Finance division I'd like to present, the consolidated financial summary of the first quarter of the fiscal year ending March 2026. This slide shows the quarterly financial summary.

I will mainly referred to the figures in the Blue box.

Yatsuda: I will mainly refer to the figures in the blue box. In Q1, we generated net sales of JPY 549.5 billion, 16.1% decrease from the previous quarter, partially because of temporary pause of customers' CapEx. Gross profit was JPY 253.9 billion, 18.2% decline from the previous quarter. Gross profit margin was 46.2%, 1.2 percentage point drop quarter-over-quarter due to the increased ratio of fixed costs along with the decrease of net sales. Operating income was JPY 144.6 billion, 21.3% drop from the previous quarter. Operating profit margin was 26.3% decline by 1.7 percentage point quarter-over-quarter, mainly due to the decrease of gross profit margin mentioned before. Income before income taxes decreased by 17.9% to JPY 151.9 billion. Net income attributable to owners apparent was JPY 117.8 billion, 17.6% decline from the previous quarter.

Koichi Yatsuda: I will mainly refer to the figures in the blue box. In Q1, we generated net sales of JPY 549.5 billion, 16.1% decrease from the previous quarter, partially because of temporary pause of customers' CapEx. Gross profit was JPY 253.9 billion, 18.2% decline from the previous quarter. Gross profit margin was 46.2%, 1.2 percentage point drop quarter-over-quarter due to the increased ratio of fixed costs along with the decrease of net sales. Operating income was JPY 144.6 billion, 21.3% drop from the previous quarter. Operating profit margin was 26.3% decline by 1.7 percentage point quarter-over-quarter, mainly due to the decrease of gross profit margin mentioned before. Income before income taxes decreased by 17.9% to JPY 151.9 billion. Net income attributable to owners apparent was JPY 117.8 billion, 17.6% decline from the previous quarter.

In the first quarter, we generated net sales of $549 5 billion yen 16, 1% decrease from the previous quarter, partially because of temporary pose of customers' capital investment grid.

Profit was $253 9 billion yen, 18.2% decline from the previous quarter gross profit margin was 46, 2% one two percentage point drop quarter over quarter due to the increased ratio of fixed coast along with the decrease of net sales.

Operating income was 144 6 billion yen 21, 3% drop from the previous quarter operating profit margin was 26.3% declined by one seven percentage point quarter over quarter, mainly due to the decrease of gross profit margin you mentioned before.

Income before income taxes.

Decreased by 17, 9% to $151 9 billion yen net income attributable to owners of parent was $117 8 billion 17, 6% decline from the previous quarter.

Capital expenditures in the first quarter were $52 8 billion yen, consisting mainly of the new development building of Tokyo to EMEA Gifu construction was completed.

Yatsuda: Capital expenditure in Q1 was JPY 52.8 billion, consisting mainly of the new development building of Tokyo Electron Miyagi, whose construction was completed in April. This is a graphic representation of the financial summary shown on the previous slide on the chronological basis for your reference. This slide shows net sales by region. As for composition in Q1, proportion of Japan rose by 3.6 percentage point to 11.7% quarter-over-quarter, while proportion of Korea dropped by 6.3 percentage point to 16.1% from the previous quarter. Proportion of sales in China in Q1 was 38.6%, remaining below 40% following the previous quarter. This shows SPE new equipment sales by application. In Q1, from the bottom of this chart, sales to non-memory customers accounted for 64%, non-volatile memory accounted for 10%, and DRAM accounted for 26%.

Koichi Yatsuda: Capital expenditure in Q1 was JPY 52.8 billion, consisting mainly of the new development building of Tokyo Electron Miyagi, whose construction was completed in April. This is a graphic representation of the financial summary shown on the previous slide on the chronological basis for your reference. This slide shows net sales by region. As for composition in Q1, proportion of Japan rose by 3.6 percentage point to 11.7% quarter-over-quarter, while proportion of Korea dropped by 6.3 percentage point to 16.1% from the previous quarter. Proportion of sales in China in Q1 was 38.6%, remaining below 40% following the previous quarter. This shows SPE new equipment sales by application. In Q1, from the bottom of this chart, sales to non-memory customers accounted for 64%, non-volatile memory accounted for 10%, and DRAM accounted for 26%.

In April.

This is a graphic representation of the financial summary, as shown on the previous slide on the chronological basis for your reference.

Yeah.

This slide shows net sales by region as for competition in the first quarter proportion of Japan rose by three six percentage points to 11, 7% quarter over quarter, what proportion of Korea dropped by six three percentage points.

To 16, 1% from the previous quarter.

Propulsion sales in China in the first quarter with 38, 6% remaining below 40% following the previous quarter.

Yes.

This shows S be new equipment sales by application.

In the first quarter from the bottom of this chart sales to non memory customers accounted for 64% non volatile memory accounted for 10% and DRAM accounted for 26%.

Sales to non memory customers were flat from the pay this quarter, while propulsion themselves to DRAM customers declined by 11 percentage point quarter over quarter, partly because of their intensive spendings in previous quarter.

Yatsuda: Sales to non-memory customers were flat from the previous quarter, while proportion of sales to DRAM customers declined by 11 percentage point quarter-over-quarter, partly because of their intensive spendings in the previous quarter. This slide shows the Field Solutions sales. In Q1, Field Solutions sales were JPY 141.2 billion, growing by JPY 2.2 billion quarter-over-quarter. Thanks to high utilization rate, mainly for the advanced nodes of the customers' fab, sales, parts, service, and modifications were all strong. This slide shows balance sheet. The total assets were JPY 2,509.3 billion. Cash and cash equivalents were JPY 367.5 billion, declining by JPY 128.7 billion from the previous quarter, primarily due to dividend payment to shareholders and payment of income taxes. Notes and accounts receivable were JPY 393.2 billion, decreasing by JPY 92.3 billion quarter-over-quarter.

Koichi Yatsuda: Sales to non-memory customers were flat from the previous quarter, while proportion of sales to DRAM customers declined by 11 percentage point quarter-over-quarter, partly because of their intensive spendings in the previous quarter. This slide shows the Field Solutions sales. In Q1, Field Solutions sales were JPY 141.2 billion, growing by JPY 2.2 billion quarter-over-quarter. Thanks to high utilization rate, mainly for the advanced nodes of the customers' fab, sales, parts, service, and modifications were all strong. This slide shows balance sheet. The total assets were JPY 2,509.3 billion. Cash and cash equivalents were JPY 367.5 billion, declining by JPY 128.7 billion from the previous quarter, primarily due to dividend payment to shareholders and payment of income taxes. Notes and accounts receivable were JPY 393.2 billion, decreasing by JPY 92.3 billion quarter-over-quarter.

Yeah.

This slide shows the field solution sales.

In the first quarter field solutions sales of about 141.2 billion yen, drawing by $2 2 billion yen quarter over quarter. Thanks to high utilization rate, mainly for the advanced nodes of the customer's fab sales parts service and modifications were all strong.

This slide shows balance sheet.

The total asset my two trillion $509 3 billion yen cash and cash equivalents were 367 5 billion yen declining by $128 7 billion from the previous quarter, primarily due to dividend payment to shareholders and payment of income taxes.

Notes and accounts receivable were 393.2 billion yen decreasing by $92 3 billion yen quarter over quarter inventories were 757.1 billion yen, increasing by seven 9 billion from the previous quarter investment in other assets.

Yatsuda: Inventories were JPY 757.1 billion, increasing by JPY 7.9 billion from the previous Q. Investment and other assets were JPY 400.2 billion, increasing by JPY 52.5 billion from the previous Q, mainly because of the increased share price. For the liabilities and net assets shown on the right-hand side, liabilities were JPY 636.5 billion, decreasing by JPY 134.1 billion from the previous Q. This is mainly because of the decrease of income tax payable along with the payment in income taxes, as I mentioned earlier. Net assets were JPY 1,872.7 billion, rising by JPY 17.5 billion quarter-over-quarter. The equity ratio was 74.0%. This shows cash flow. Cash inflow from operating activities in Q1 was JPY 74.9 billion. The cash outflow from the investment activities was JPY 54.1 billion, mainly due to acquisition of fixed assets.

Koichi Yatsuda: Inventories were JPY 757.1 billion, increasing by JPY 7.9 billion from the previous Q. Investment and other assets were JPY 400.2 billion, increasing by JPY 52.5 billion from the previous Q, mainly because of the increased share price. For the liabilities and net assets shown on the right-hand side, liabilities were JPY 636.5 billion, decreasing by JPY 134.1 billion from the previous Q. This is mainly because of the decrease of income tax payable along with the payment in income taxes, as I mentioned earlier. Net assets were JPY 1,872.7 billion, rising by JPY 17.5 billion quarter-over-quarter. The equity ratio was 74.0%. This shows cash flow. Cash inflow from operating activities in Q1 was JPY 74.9 billion. The cash outflow from the investment activities was JPY 54.1 billion, mainly due to acquisition of fixed assets.

While 400.2 billion, increasing by $52 5 billion yen from the previous quarter, mainly because of the increased share price.

For the liabilities, our net assets shown on the right on site liabilities were $636 5 billion yen decreasing by $134 1 billion from the previous quarter. This is mainly because of the decrease of income tax payable along with the payment in income taxes as I mentioned earlier.

Net assets were one trillion $872 7 billion rising by 17.5 billion yen quarter over quarter. The equity ratio was 74.0%. This shows cash flow cash inflow from operating activities in the first quarter.

$74 9 billion yen.

The cash outflow from the investment activities was $54 1 billion, mainly due to acquisition of fixed assets. The cash outflow from financing activities was $151 1 billion named primary because of debit payment as a result free cash flow was positive 27 billion yen just conclude.

Yatsuda: The cash outflow from financing activities was JPY 151.1 billion, primarily because of dividend payment. As a result, free cash flow was positive, JPY 20.7 billion. This concludes my presentation. Thank you very much for your kind attention. Now, Mr. Kawai will talk about business environment and financial estimates. Kawai-san, please. Go ahead. This is Kawai. Once again, thank you very much for joining us today. I will present business environment and financial estimates. Some changes were observed in the business environment, we have revised WFE market outlook and our financial estimates. Let me start the revisions made and the business progress as well. In Q1 of fiscal 2026, both net sales and profit were almost in line with guidance. Progress of strategic product sales and development evaluation activities toward PO acquisition proceeded smoothly.

Koichi Yatsuda: The cash outflow from financing activities was JPY 151.1 billion, primarily because of dividend payment. As a result, free cash flow was positive, JPY 20.7 billion. This concludes my presentation. Thank you very much for your kind attention. Now, Mr. Kawai will talk about business environment and financial estimates. Kawai-san, please. Go ahead. This is Kawai. Once again, thank you very much for joining us today. I will present business environment and financial estimates. Some changes were observed in the business environment, we have revised WFE market outlook and our financial estimates. Let me start the revisions made and the business progress as well. In Q1 of fiscal 2026, both net sales and profit were almost in line with guidance. Progress of strategic product sales and development evaluation activities toward PO acquisition proceeded smoothly.

My presentation. Thank you very much where your kind attention.

No.

The color Mr. Colbert will talk about business environment in financial estimates probably someplace.

Go ahead.

This is <unk>.

Once again, thank you very much for joining us today.

I will present, the business environment and financial estimates.

As some changes well served in the business environment, we have revised Wi Fi market outlook and our financial estimates.

So let me start.

The provisions made in the business progress as well in the first quarter of fiscal 2020 is fixed.

Both net sales and profit, but almost in line with guidance progress subset of Jupiter that sales and development evaluation activities slipped below acquisition pellucid seamlessly.

For film deposition tool hunting, a new material Emily and little resistant metal. Many NAND customers are working on the variation with our batch vanishes.

Yatsuda: film deposition 200 in the new material, namely low-resistance metal, many non-customers are working on evaluation with our batch furnaces. For a series of 3D integration tools, including the Extreme Laser Lift Off tool released in December 2024, we are currently having business discussions with advanced logic customers and non-customers. In April, construction of the new development building in Miyagi was completed, in which we will enhance development of HRs, one of our main products. Our financial estimate for the first half of fiscal 2026 remains unchanged. Specifically, we expect net sales of JPY 1 trillion 150 billion, operating income of JPY 288 billion, and operating profit margin of 25.0%. Calendar 2025, WFE market proceeds almost as expected, although there are some shifts in investments. Factoring in impacts of exchange rate fluctuation, the WFE market is expected to grow slightly from the previous year to $115 billion.

Koichi Yatsuda: film deposition 200 in the new material, namely low-resistance metal, many non-customers are working on evaluation with our batch furnaces. For a series of 3D integration tools, including the Extreme Laser Lift Off tool released in December 2024, we are currently having business discussions with advanced logic customers and non-customers. In April, construction of the new development building in Miyagi was completed, in which we will enhance development of HRs, one of our main products. Our financial estimate for the first half of fiscal 2026 remains unchanged. Specifically, we expect net sales of JPY 1 trillion 150 billion, operating income of JPY 288 billion, and operating profit margin of 25.0%. Calendar 2025, WFE market proceeds almost as expected, although there are some shifts in investments. Factoring in impacts of exchange rate fluctuation, the WFE market is expected to grow slightly from the previous year to $115 billion.

For our series C D in degradation tools, including the extreme laser litho tool released in December 2024, we are currently having business discussions with advance logic customers and NAND customers in April construction as the new development building in Yankee.

<unk> completed English, we will enhance development of Hs one of our main products.

Our financial estimates for the first half of fiscal 'twenty 'twenty six remain unchanged specifically, we expect net sales to one treaty on 150 billion yen operating income of 288 million yen and operating profit margin of 25.0%.

<unk> 2025.

W. P market perceives almost as expected, although there are some shifts in investments.

Factoring in impacts of exchange rate fluctuation there if he might get expected to grow slightly from the previous year to $115 billion.

Outlets are semiconductor demand remains unchanged the ws he market in the first half of sea by 2026. However is expected to be affected by changes of customer investment trends, specifically customer announced seek for higher productivity three through yield enhancement optimization themselves.

Yatsuda: The outlook of semiconductor demand remains unchanged. The WFE market in the first half of CY 2026, however, is expected to be affected by changes of customers' investment trends. Specifically, customers now seek higher productivity through yield enhancement, optimization of supply-demand balance to raise profitability, and shift from proactive to solid investment. Accordingly, we have revised the outlook of WFE market growth in the fiscal year ending March 2026 to -5% year-over-year. Changes in each segment are shown in this slide. Along with the downward revision of the fiscal year-based WFE market outlook, we have revised our FY 2026 full-year financial estimates to net sales of JPY 2,350 billion and operating profit margin of 24.3%. Despite the downward revision, our gross profit is expected to exceed JPY 1 trillion for two years in a row.

Koichi Yatsuda: The outlook of semiconductor demand remains unchanged. The WFE market in the first half of CY 2026, however, is expected to be affected by changes of customers' investment trends. Specifically, customers now seek higher productivity through yield enhancement, optimization of supply-demand balance to raise profitability, and shift from proactive to solid investment. Accordingly, we have revised the outlook of WFE market growth in the fiscal year ending March 2026 to -5% year-over-year. Changes in each segment are shown in this slide. Along with the downward revision of the fiscal year-based WFE market outlook, we have revised our FY 2026 full-year financial estimates to net sales of JPY 2,350 billion and operating profit margin of 24.3%. Despite the downward revision, our gross profit is expected to exceed JPY 1 trillion for two years in a row.

Fly demand patterns to raise profitability and shift from proactive to solid investment Accordingly, we have revised the outlook of the basically market growth in the fiscal year, ending March 22006 to negative 5% year over year changes in each segment are shown in this slide.

Along with the downward revision of the fiscal year based Wi Fi market outlook, we have revised our FY 2026 full ear financial estimates to net sales up two trillion and 350 billion yen and operating profit margin of 24, 3%.

Despite the downward revision our gross profit is expected to exceed one treating in for two years in a row.

Despite the changes of the disc WK market up outlook from January to June 'twenty 'twenty six there is no change at all in powerful growing trend of the semiconductor demand supported by technology driver of a I serve applications. Therefore, we plan to invest 290.

Yatsuda: Despite the changes of the WFE market outlook from January to June 2026, there is no change at all in the powerful growing trend of the semiconductor demand supported by technology driver of AI server applications. We plan to invest JPY 295 billion to R&D, almost as announced three months ago. This shows the revised SPE new equipment sales focus. The SPE new equipment sales in the second half of this fiscal year are expected to grow slightly from the first half to JPY 880 billion. Here is the breakdown by application. Please note that this revision is attributed mainly to the customers' manufacturing technology enhancement and their investment strategy changes, therefore, it does not necessarily link with the semiconductor demand. As I said before, due to the changes in customers' investment trend, we are currently scrutinizing CY 2026 WFE market.

Koichi Yatsuda: Despite the changes of the WFE market outlook from January to June 2026, there is no change at all in the powerful growing trend of the semiconductor demand supported by technology driver of AI server applications. We plan to invest JPY 295 billion to R&D, almost as announced three months ago. This shows the revised SPE new equipment sales focus. The SPE new equipment sales in the second half of this fiscal year are expected to grow slightly from the first half to JPY 880 billion. Here is the breakdown by application. Please note that this revision is attributed mainly to the customers' manufacturing technology enhancement and their investment strategy changes, therefore, it does not necessarily link with the semiconductor demand. As I said before, due to the changes in customers' investment trend, we are currently scrutinizing CY 2026 WFE market.

<unk> 5 billion yen to R&D almost as announced.

Three months ago.

This shows the revised S. P E new equipment sales forecast.

S. B E news equipment sales in the second half of this fiscal year I expect it to grow slightly from the first half to 880 billion yen.

Here is the breakdown by application. Please note that this revision is attributed mainly to the customers' manufacturing technology enhancement and their investment strategy changes and therefore, it does not necessarily link with the semiconductor demand.

As I said before due to the changes in customers' investment trend. We are currently scrutinizing C. A 'twenty 'twenty six.

W E market, having said that however, theres no change in our outlook of semiconductor market, which keeps expanding driven by the growing demand of cutting edge semiconductor plant to be release in calendar 2027 full AI servers.

Yatsuda: Having said that, however, there is no change in our outlook of the semiconductor market, which keeps expanding, driven by the growing demand of cutting-edge semiconductor plants to be released in calendar 2027 for AI servers. AI servers require high computing power to process massive data at high speed. Currently, two of the 4-nanometer node GPUs are used, but in calendar 2026, four of the 3-nanometer node GPUs will be used. In calendar 2027, each GPU will have 500 billion transistors, about 2.5 times more than the current GPU. The number of HBM will also increase. Memory capacity of HBM will increase by about four times, driven by the device scaling of each DRAM and the increase in the number of DRAMs to be stacked. We are finally shifting from the gigabyte to terabyte era.

Koichi Yatsuda: Having said that, however, there is no change in our outlook of the semiconductor market, which keeps expanding, driven by the growing demand of cutting-edge semiconductor plants to be released in calendar 2027 for AI servers. AI servers require high computing power to process massive data at high speed. Currently, two of the 4-nanometer node GPUs are used, but in calendar 2026, four of the 3-nanometer node GPUs will be used. In calendar 2027, each GPU will have 500 billion transistors, about 2.5 times more than the current GPU. The number of HBM will also increase. Memory capacity of HBM will increase by about four times, driven by the device scaling of each DRAM and the increase in the number of DRAMs to be stacked. We are finally shifting from the gigabyte to terabyte era.

And I serve as require high computing power to process massive data at high speed.

Currently two of the four nanometer node GPU are used but in calendar 2020 says for three nanometer node GP will be used and in calendar 2027, each GPU will have 500 billion transistors about 2.5.

Claims more than the current Gpus the number of H B M will be also increase memory capacity of H B M will increase by about four times driven by device scaling up each DRAM and a piece of number of DRAM to be stocks. So we are finally shift from the gigabyte two terabyte era investment to realize the next.

Generation AI computing platform and expect it to start growing from the second half second half of July 2000, Twenty's fixed which device skating advanced packaging or a business opportunities will be expanding more and more.

Yatsuda: Investment to realize the next generation AI computing platform is expected to start growing from the second half of CY 2026. With device scaling and advanced packaging, our business opportunities will be expanding more and more. This shows our plan for R&D expenses and CapEx. In this fiscal year, following the new development building in Miyagi, whose construction was completed in April, construction of a new development building in Kumamoto and production and logistics center in Iwate is planned to be completed in this coming fall in Miyagi. We have also started construction of a new production building in June, which adopts the next generation Smart Manufacturing concept. R&D expenses in fiscal 2026 are expected to be JPY 295 billion, as I said before. The plan for CapEx and depreciation remains unchanged, expected to be JPY 240 billion and JPY 86 billion, respectively.

Koichi Yatsuda: Investment to realize the next generation AI computing platform is expected to start growing from the second half of CY 2026. With device scaling and advanced packaging, our business opportunities will be expanding more and more. This shows our plan for R&D expenses and CapEx. In this fiscal year, following the new development building in Miyagi, whose construction was completed in April, construction of a new development building in Kumamoto and production and logistics center in Iwate is planned to be completed in this coming fall in Miyagi. We have also started construction of a new production building in June, which adopts the next generation Smart Manufacturing concept. R&D expenses in fiscal 2026 are expected to be JPY 295 billion, as I said before. The plan for CapEx and depreciation remains unchanged, expected to be JPY 240 billion and JPY 86 billion, respectively.

This shows our plan for R&D expenses and Capex in this fiscal year following the new the blocking and building a mere your foods construction was completed in April construction of a new development building in Kumamoto and production and logistics center in what it is supposed to be completed in this coming fall.

In <unk>. We have also started construction of new production building in June which adopt next generation smart manufacturing concept R&D expenses in fiscal 'twenty to paint is fixed I expect it to be 295 billion as I said before the plan for Capex and depreciation remains.

Unchanged and expected to be 240 billion yen and 86 billion yen respectively.

This is my last slide showing the dividend forecast, reflecting the revised financial estimates for the second half of this fiscal year full year dividend per share is expected to 485 yen in this fiscal year, while it's taken account of setups cash on hand and capital efficient she draining this.

Yatsuda: This is my last slide showing the dividend focus. Reflecting the revised financial estimate for the second half of this fiscal year, full-year dividend per share is expected to be JPY 485 in this fiscal year. While taking account of the state of cash on hand and capital efficiency during this fiscal year, we will flexibly consider the implementation of share repurchase. This concludes my presentation. Thank you very much for your kind attention. Now, we will have a question-and-answer session until 6:30 PM, Japan time. You can ask questions either in Japanese or English, but our speakers on the Japanese channel, please allow us to take audio questions only in Japanese. If you ask a question in Japanese, please click the raise hand button on Webex. For details, please refer to the instructions attached to the invitation email. I will invite you one by one.

Koichi Yatsuda: This is my last slide showing the dividend focus. Reflecting the revised financial estimate for the second half of this fiscal year, full-year dividend per share is expected to be JPY 485 in this fiscal year. While taking account of the state of cash on hand and capital efficiency during this fiscal year, we will flexibly consider the implementation of share repurchase. This concludes my presentation. Thank you very much for your kind attention. Now, we will have a question-and-answer session until 6:30 PM, Japan time. You can ask questions either in Japanese or English, but our speakers on the Japanese channel, please allow us to take audio questions only in Japanese. If you ask a question in Japanese, please click the raise hand button on Webex. For details, please refer to the instructions attached to the invitation email. I will invite you one by one.

Fiscal year, where will it flexibly consider implementation of share repurchase.

This concludes my presentation. Thank you very much for your kind attention.

No. It will have question answer session till 630 P. M. Japan time, it can ask questions either in Japanese or English, but our speakers on the Japanese channel. Please allow us to take all of your questions only in Japanese if you ask a question in Japanese please click the way.

His hand button on Webex for details please refer to the instructions attached to the invitation email.

I will invite you one by one our secretariat.

We'll contexture in advance so please check webex chat box.

Yatsuda: Our secretariat will contact you in advance, so please check Webex's chat box. When asking a question, please, you are kindly requested to unmute your microphone for yourself. When your question is answered by our attendees, please hit the raise hand button again to remove the raise hand signal. For questions in English, please use Webex's chat box and give your affiliation name and question in text and send it to our secretariat. We will refrain from answering questions if your name and affiliation are not given. On the Japanese channel, we will translate your English question, and I will read it out in Japanese, and our speakers will answer in Japanese. On the English channel, the question and answer will be simultaneously interpreted into English on a real-time basis.

Koichi Yatsuda: Our secretariat will contact you in advance, so please check Webex's chat box. When asking a question, please, you are kindly requested to unmute your microphone for yourself. When your question is answered by our attendees, please hit the raise hand button again to remove the raise hand signal. For questions in English, please use Webex's chat box and give your affiliation name and question in text and send it to our secretariat. We will refrain from answering questions if your name and affiliation are not given. On the Japanese channel, we will translate your English question, and I will read it out in Japanese, and our speakers will answer in Japanese. On the English channel, the question and answer will be simultaneously interpreted into English on a real-time basis.

When asking a question please.

These are you all kind of kindly requested to mute your microphone for yourself. When Youre question is answered by our attendees. Please hit the wastewater raise hand foot and again to remove the raise hand signal for questions. English. Please use webex chat box and gave you a affiliation neiman question in <unk>.

And send it to our secretariat well everything from answering questions. If you're a name and definition I'm not given on the Japanese channel Railroad translate your English question and I will read it out in Japanese and our speakers will be answered in Japanese on English channel. The question answer will be.

Newest leaks in jeopardy into English on real time basis.

So you'd like to take questions from as many participants as possible we'd like to take one question per person. If time allows we'll take additional questions.

Yatsuda: As we would like to take questions from as many participants as possible, we would like to take one question per person. If time allows, we will take additional questions. The first question from Yoshida-san from CLSA Securities. I am Yoshida from CLSA Securities. I have a question. In 2025, you have revised the WFE market outlook. I want to see some information by application. Now you are now conservative for the first half of 2026. Based on the peripheral situation, I think the advanced foundry and DRAM might be increasing, so I was a bit surprised. Once again, first half, you said rather weak, but throughout the year for 2026, I think you said double-digit growth. What happens in the full-year focus by application and the full marketplace? By application, changes are made for logic and foundry.

Koichi Yatsuda: As we would like to take questions from as many participants as possible, we would like to take one question per person. If time allows, we will take additional questions. The first question from Yoshida-san from CLSA Securities. I am Yoshida from CLSA Securities. I have a question. In 2025, you have revised the WFE market outlook. I want to see some information by application. Now you are now conservative for the first half of 2026. Based on the peripheral situation, I think the advanced foundry and DRAM might be increasing, so I was a bit surprised. Once again, first half, you said rather weak, but throughout the year for 2026, I think you said double-digit growth. What happens in the full-year focus by application and the full marketplace? By application, changes are made for logic and foundry.

So the first question.

From you she does some from sheer let's say securities.

I am Yoshida from CLSA Securities.

Have a question.

2025, we have revised the WPC market outlook I want to see some information by application. So now you are now conservative for the first half of 2026. So based on the peripheral situation I think they've found advanced foundry and DRAM might be increasing.

So I was a bit surprised so let's again, so first half you said, rather weak but throughout the year for 2026, I think you said double digit growth so what happens in the full year.

[noise] forecast by application and the whole marketplace.

By application chain.

Changes are made for logic and foundry the advanced logic.

Some of the customers have revised their investment plan for logic and foundry. That's the reason why we have revised our outlook partially for others. There have been no major changes, however, NAND investment gets a bit weaker than expected. However.

Yatsuda: The advanced logic, some of the customers have revised their investment plan for logic and foundry. That's the reason why we have revised our outlook partially. For others, there have been no major changes. Non-investment gets a bit weaker than expected. The non-investment will double. That's what I said before, the original amount is not so much. The changes in non-investment do not have a big impact. This is Kawai. Let me add some more comments. The customers now, technology is enhanced, they try to review the supply-demand balance when they prepare the investment plan. Also, they are shifting from the aggressive, proactive investment to the steady, solid investment to enhance the yield. There are several aspects. From Q1, we thought there was some upward trend. There has been some deceleration in the customer spendings.

Koichi Yatsuda: The advanced logic, some of the customers have revised their investment plan for logic and foundry. That's the reason why we have revised our outlook partially. For others, there have been no major changes. Non-investment gets a bit weaker than expected. The non-investment will double. That's what I said before, the original amount is not so much. The changes in non-investment do not have a big impact. This is Kawai. Let me add some more comments. The customers now, technology is enhanced, they try to review the supply-demand balance when they prepare the investment plan. Also, they are shifting from the aggressive, proactive investment to the steady, solid investment to enhance the yield. There are several aspects. From Q1, we thought there was some upward trend. There has been some deceleration in the customer spendings.

The NAND investment will double that's what I said before about the original amount is not so much. Therefore, the changes in non investment does not have big impact.

This is Carlos let me add some more comments.

The cash them as.

Now technology is enhanced and they're trying to review the supply demand balance when they prepare the investment plan.

And also they are shifting from the unless they've proactive investment to the steady solid investment to enhance the yield so that of civil aspect. So from the first quarter. We thought there was some upward trend.

However, there have been some deceleration.

And the customer Spendings.

So this trend.

The demand the demand for semiconductor doesn't not decrease.

Yatsuda: This trend, the demand for semiconductor does not decrease. Therefore, you can see recovery sometime in the future. From maybe the first 6 months, next calendar year might be some correction period. However, as I said earlier, new technologies for AI server will be released in the second half of 2027. Therefore, from the second half of 2026 to the early 2027, we think the customers' CapEx will be increasing. That's how we view the market trend. In that sense, I thought double-digit growth is expected, but the first half of next year will see some deceleration, but we have a lot of expectation for the increasing trend in the second half of next year. We are now scrutinizing the situation. We think the positive growth is expected. The advanced logic and logic, the proportion is about 50% to 50% for this year.

Koichi Yatsuda: This trend, the demand for semiconductor does not decrease. Therefore, you can see recovery sometime in the future. From maybe the first 6 months, next calendar year might be some correction period. However, as I said earlier, new technologies for AI server will be released in the second half of 2027. Therefore, from the second half of 2026 to the early 2027, we think the customers' CapEx will be increasing. That's how we view the market trend. In that sense, I thought double-digit growth is expected, but the first half of next year will see some deceleration, but we have a lot of expectation for the increasing trend in the second half of next year. We are now scrutinizing the situation. We think the positive growth is expected. The advanced logic and logic, the proportion is about 50% to 50% for this year.

Therefore, you can see recovery sometime in the future.

From maybe the first six months next fiscal next calendar year might be some.

Correction period, however, as I said earlier.

Now new technologies for AI server will be the DS in the second half of 2027, therefore from the second half of 2026 to the early 2027, we think the customer is capex will be increasing.

How we view the market trend in that sense.

I saw double digit growth as expected, but the first half of next year.

We'll see some D simulation, but we'd have a lot of expectation for the increasing trend in the second half of next year, but we are now scrutinizing distillation.

But we think the positive growth as expected.

So the advanced logic.

And logic the proportion is about 50% to 50% for this year. The next year should be 60% to 40%.

Yatsuda: The next year should be 60% to 40%. That's how we view the proportion. Thank you very much. Let me get some clarification. 2026 calendar year, although this is positive growth, but you are now revising the figure, scrutinizing figures. You will give us more. When you said proportion between the advanced logic, are you talking about the proportion between the advanced and mature node? This year, 50 to 50. Next year, that proportion will become 60 to 40. That's correct. 2027, we can see new technology for AI server. As I said earlier in my presentation, that would be a driver. That's one thing. Now GDDR4 and GDDR5 price has been reversed. Because of that, there are some corrections in the market. GDDR5 will become a driver to further grow the WFE market.

Koichi Yatsuda: The next year should be 60% to 40%. That's how we view the proportion. Thank you very much. Let me get some clarification. 2026 calendar year, although this is positive growth, but you are now revising the figure, scrutinizing figures. You will give us more. When you said proportion between the advanced logic, are you talking about the proportion between the advanced and mature node? This year, 50 to 50. Next year, that proportion will become 60 to 40. That's correct. 2027, we can see new technology for AI server. As I said earlier in my presentation, that would be a driver. That's one thing. Now GDDR4 and GDDR5 price has been reversed. Because of that, there are some corrections in the market. GDDR5 will become a driver to further grow the WFE market.

That's how we view the propulsion.

Thank you very much.

Let me get some clarification twenty-twenty six calendar year 'twenty 'twenty six although this is positive growth, but you are now revising the figure scrutinizing figures. Therefore, you will give us more like when you said proportion between the advanced and losses are you talking about the proportion between.

In the advanced and mature node DCF 50 to 50 by next year that proposal will become 60 to 40. That's correct 2027, you can see new technology for AI server as I said earlier in my presentation.

That would be a driver.

That's one thing.

Also.

No D D. Our fall and DDR five price has been reversed bid.

Because of that there are some corrections in the market due to a five.

We will become a driver to further drive our grow the Debbie if he high market for edge AI technology N. P. You will be introduced and die size will be increased by 30% as well.

Yatsuda: For each AI technology, NPU will be introduced and die size will be increased by 30% as well. These are the technology drivers which will have the big impact from late 2026 to the early 2027. Customers' enhancement of technology for production, and they are focusing on profitability. They do have now a healthy growth plan. Because of that, there are some deceleration in the investment plan, but by and large, there might be a delay of six months, and that six-month delay has been incorporated. There have been no changes in the device market. I think the device market will be growing as expected. Thank you very much. That's very clear. Mr. Yoshida, thank you very much for your question. Next question is from Mr. Wadaki, the Morgan Stanley MUFG Securities Research Japan.

Koichi Yatsuda: For each AI technology, NPU will be introduced and die size will be increased by 30% as well. These are the technology drivers which will have the big impact from late 2026 to the early 2027. Customers' enhancement of technology for production, and they are focusing on profitability. They do have now a healthy growth plan. Because of that, there are some deceleration in the investment plan, but by and large, there might be a delay of six months, and that six-month delay has been incorporated. There have been no changes in the device market. I think the device market will be growing as expected. Thank you very much. That's very clear. Mr. Yoshida, thank you very much for your question. Next question is from Mr. Wadaki, the Morgan Stanley MUFG Securities Research Japan.

So these are the technology drivers.

Which will have the big impact from late 2026 to the early 2027.

So customers.

And huntsman of technology for production and they are focusing on profitability. So they do have now healthy growth plan because of that there is some deceleration in the investment plan, but by and large that might be the delay of six months and that six months delay has been incorporated and there have been no changes.

In device market.

I think the best market will be growing as expected. Thank you very much that's very clear.

Mr. Yoshida. Thank you very much for your question.

Next question is from.

Mr. La Yaqui the Morgan Stanley.

U F G Securities Research Japan.

Festival.

About the downward revision.

Yatsuda: First of all, about the downward revision, I think this is a kind of plot also. I understand the downward revision. I have a question regarding China. In general, in your company, the company's own Entity List will not be conducted at all? As for you don't sell HRs product, but you are selling other products to the customers, Chinese customers on the Entity List. Could you explain the situation, please? Our company is not affected by the Entity List. We are shipping the tools approved by the Japanese government, METI. We are following the METI's policy. Your company products, for example, the products on the Entity List, roughly how much percentage of your products are related to the Entity List and how much percentage are not related to the Entity? More critical equipment are to be regulated. That's the natural trend.

Koichi Yatsuda: First of all, about the downward revision, I think this is a kind of plot also. I understand the downward revision. I have a question regarding China. In general, in your company, the company's own Entity List will not be conducted at all? As for you don't sell HRs product, but you are selling other products to the customers, Chinese customers on the Entity List. Could you explain the situation, please? Our company is not affected by the Entity List. We are shipping the tools approved by the Japanese government, METI. We are following the METI's policy. Your company products, for example, the products on the Entity List, roughly how much percentage of your products are related to the Entity List and how much percentage are not related to the Entity? More critical equipment are to be regulated. That's the natural trend.

These are kind of plateaus, so I understand the downward revision I have a question regarding China in general in your company stood companies in one entity list would not be conducted at all or you don't sell it Joe some product that you are selling other products to the customers Chinese customers on the entity list.

Could you explain distribution please.

Our company is not affected by the entity list.

Okay.

We are shipping the.

Tools.

Route by the Japanese government May Tee.

So we are following the Metis policy.

So your company.

Product for example.

These products on the entity list.

Roughly how about how much percentage of your products are.

Related to the entity list and how much percentage are not related entity more critical equipment to be regulated that's the natural trend. Therefore, it's not the volume base, while month base is a bit difficult to say.

Yatsuda: Therefore, it's not volume-based or month-based. It's a bit difficult to say. To some extent, there are some equipment we are not allowed to ship over the past few years. Clear figures or numbers cannot be disclosed in this meeting. We are following METI's policy and METI's rule. Now the revision of financial estimate is not attributed to the export control. What about more than 50% or less than 50%? They're way below 50%. More than 10% of your products are affected by the regulations. We haven't calculated the percentage. I'm sorry for that. Thank you very much. Mr. Wadaki, thank you very much for your question. Next question is from Mr. Nakamura of Goldman Sachs Japan. Mr. Nakamura, please. Thank you very much. This is Nakamura. Thank you. The second half of this fiscal year, now you have made the downward revision.

Koichi Yatsuda: Therefore, it's not volume-based or month-based. It's a bit difficult to say. To some extent, there are some equipment we are not allowed to ship over the past few years. Clear figures or numbers cannot be disclosed in this meeting. We are following METI's policy and METI's rule. Now the revision of financial estimate is not attributed to the export control. What about more than 50% or less than 50%? They're way below 50%. More than 10% of your products are affected by the regulations. We haven't calculated the percentage. I'm sorry for that. Thank you very much. Mr. Wadaki, thank you very much for your question. Next question is from Mr. Nakamura of Goldman Sachs Japan. Mr. Nakamura, please. Thank you very much. This is Nakamura. Thank you. The second half of this fiscal year, now you have made the downward revision.

But.

To some extent there are some equipment, we are not allowed to ship.

Over the past few years.

But korea fear or numbers.

Not be disclosed.

In this meeting.

So we are following mid tiers policy and met his rule.

So now the <unk>.

The revision of financial estimate.

It's not attributed to the export control.

So we are about more than 50% or less than 50%.

The way below 50%.

So up more than 10%.

Of your products affected by deregulation.

We haven't calculated the percentage I'm sorry for that thank you very much.

Mr. <unk>. Thank you very much for your question next question is from Mr. Nakamura of Goldman Sachs, Japan. Mr. Nakamura. Please. Thank you very much. This is knock on wood on thank you.

So the second half of your fifth this fiscal year now you have me. They don't word revision I want to know more about that Delaware Division Wi Fi market for calendar 2025.

Yatsuda: I want to know more about that downward revision. WFE market for calendar 2025. There have been no major changes, but you have revised your outlook downward. That means in the market, your market share has been declining. Is that what you mean? Or there have been drastic change for the outlook of January to March 2026 over the past three months? On page 13, you can see several factors related to the downward revision. When you quantify those factors, which factor plays the major role? If the customer's productivity goes up, even if the semiconductor market will grow, I'm afraid the SPE industry cannot enjoy good business. Could you explain those things, please? First of all, could you repeat the first question once again, please? Okay. The calendar 2025 WFE market does not change so much while your financial estimate has been revised downward.

Koichi Yatsuda: I want to know more about that downward revision. WFE market for calendar 2025. There have been no major changes, but you have revised your outlook downward. That means in the market, your market share has been declining. Is that what you mean? Or there have been drastic change for the outlook of January to March 2026 over the past three months? On page 13, you can see several factors related to the downward revision. When you quantify those factors, which factor plays the major role? If the customer's productivity goes up, even if the semiconductor market will grow, I'm afraid the SPE industry cannot enjoy good business. Could you explain those things, please? First of all, could you repeat the first question once again, please? Okay. The calendar 2025 WFE market does not change so much while your financial estimate has been revised downward.

So there have been no major changes, but you have revised your outlook downward that means.

In the market.

Your market share has been declining is about you mean or that had been great drastic change for the outlook of the January to March 2026 over the past three months on page 13, you can see a several factors related to the downward revision.

So when you quantify those factors, which factor plays.

Plays a major role.

If the customers productivity goes up.

Even if the semiconductor market will grow I'm afraid the SP industry cannot enjoy good business.

Could you explain those things please.

Festival.

Could you repeat the first question once again, please okay. The calendar 'twenty 'twenty five WP market does not change so much while your financial estimate has been revised downward why does it happen. Thank.

Thank you very much this time.

Yatsuda: Why does it happen? Thank you very much. This time, WFE market on the calendar year basis should be $115 billion. The WFE market outlook is increased. Because of the exchange rate, the equipment produced in Japan, when they are calculated on the dollar basis, actually increased by $3 billion. The remaining $2 billion is coming from the leading-edge logic pulled-in investment together with other reasons. That's the reason why we have increased the WFE market outlook by $5 billion. As for your second question, what you say is correct. The Q4, we think so from January to March next fiscal year, we thought we can see increasing growth from January to March 2026. That's our previous focus.

Koichi Yatsuda: Why does it happen? Thank you very much. This time, WFE market on the calendar year basis should be $115 billion. The WFE market outlook is increased. Because of the exchange rate, the equipment produced in Japan, when they are calculated on the dollar basis, actually increased by $3 billion. The remaining $2 billion is coming from the leading-edge logic pulled-in investment together with other reasons. That's the reason why we have increased the WFE market outlook by $5 billion. As for your second question, what you say is correct. The Q4, we think so from January to March next fiscal year, we thought we can see increasing growth from January to March 2026. That's our previous focus.

Wi Fi market.

On the calendar year basis basis should be $115 billion, so the Wi Fi market.

Outlook has increased.

But because of the exchange rate the equipment produced in Japan. When they are calculated on the dollar basis actually increased by $3 billion. The remaining to be doing dollars is coming from the leading edge logic.

Poured in.

Investment.

Together with other reasons. That's the reason why we have increased the WP market outlets by $5 billion.

As for your second question.

Let's just say it's correct.

The fourth quarter, we think so.

So from March two from January to March next fiscal year.

Next year, we can we thought we can see the increase in growth from the January to March 2026, that's our previous.

Focus however, because of the changes in the customer's strategy, where they are.

Yatsuda: However, because of the changes in the customer strategy, where they are trying to improve productivity and they try to focus on productivity now, actually our outlook has been revised downward. Impacts are shown on page 13. You asked me to quantify those factors. That's what you said in your question. There are 5 factors on page 13. The customer's investment revision for advanced logic, the reduction of the legacy investment by the emerging customer, Chinese customers, and investment plan change because of the focusing on the profitability and GDDR4 and GDDR5. This is the order from the top towards the bottom. I think this is the order of the impact, especially the top 3 has the major impacts. When it comes to China, the emerging semiconductor manufacturers in China, that is about $2 billion on the basis of fiscal year. Their impact is about $2 billion.

Koichi Yatsuda: However, because of the changes in the customer strategy, where they are trying to improve productivity and they try to focus on productivity now, actually our outlook has been revised downward. Impacts are shown on page 13. You asked me to quantify those factors. That's what you said in your question. There are 5 factors on page 13. The customer's investment revision for advanced logic, the reduction of the legacy investment by the emerging customer, Chinese customers, and investment plan change because of the focusing on the profitability and GDDR4 and GDDR5. This is the order from the top towards the bottom. I think this is the order of the impact, especially the top 3 has the major impacts. When it comes to China, the emerging semiconductor manufacturers in China, that is about $2 billion on the basis of fiscal year. Their impact is about $2 billion.

Trying to improve productivity and they tried to focus on precedent where they appear to be now.

Actually our outlook has been devised downward so impacts are shown on page the chains and.

You asked me quantify those factors that's what you said in your question. There are five factors on page that gene.

Cash them as investment revision for look advanced logic.

The reduction of the legacy investment by the emerging customer Chinese customers and investment plan change because of the focusing on the profitability and Adi for an 85.

So this is the order.

From the top Tories.

The bottom I think this is the order of the impact, especially the top three has a major impact.

When it comes to China the imaging.

Semiconductor manufacturers in China, there is about $2 billion.

On the basis of fiscal year.

The impact is about $2 billion.

Yes.

So the Chinese imaging customers.

Yatsuda: The Chinese emerging customers, maybe there are about 150 chip makers in China. That 150 Chinese chip makers are getting more a little bit conservative. When we accumulate the figures, there is amounted to $2 billion. Five factors, and the top one is a major one. There are three major reasons on the top for our downward revision. Thank you very much for your detailed explanation. Mr. Nakamura, thank you very much for your question. Next question is from Shimamoto-san from Okasan Securities. Thank you very much. I am Shimamoto from Okasan Securities. I have some patience for figures. The very simple question. See why calendar year WFE, calendar 2025 WFE market, you said $115 billion? This is the upward revision.

Maybe you did about 150 chip makers in China, and that 150, Chinese chipmakers are getting more and a little bit conservative and when we accumulate the figures that is amounted to $2 billion. So five Fox does and the top one is a measure when the measure.

Koichi Yatsuda: The Chinese emerging customers, maybe there are about 150 chip makers in China. That 150 Chinese chip makers are getting more a little bit conservative. When we accumulate the figures, there is amounted to $2 billion. Five factors, and the top one is a major one. There are three major reasons on the top for our downward revision. Thank you very much for your detailed explanation. Mr. Nakamura, thank you very much for your question. Next question is from Shimamoto-san from Okasan Securities. Thank you very much. I am Shimamoto from Okasan Securities. I have some patience for figures. The very simple question. See why calendar year WFE, calendar 2025 WFE market, you said $115 billion? This is the upward revision.

Primary is there are three major reasons on the top.

Okay.

For our downward revision.

Yeah.

Thank you very much for your detailed explanation.

Mr. Nakamura. Thank you very much for your question next question is from Schuman with those Sun from <unk> Securities.

Thank you very much I am Shimon water from <unk> Securities.

Thank you very much.

I have some patients for figures.

The very simple question C Y calendar E W.

W E.

Calendar 2025, Debbie if your market you said $115 billion. This is upward revision on the F. Five basis also on the dollar basis.

Yatsuda: On the FY basis, also on the dollar basis, the minus or negative 5% is expected compared with previous year. 5% increase on this calendar year basis. Minus 5% on the fiscal year basis. 3 months difference makes that big difference. That's correct. That's because of the outlook from January to March next year has been drastic changes. Yes. We thought you can see some increasing trend from January to March, and we thought we need to do some preparation because in the technology driver, we were expecting increasing trend from January to March. However, there is only actually the decreasing trend from January to March. The Q4 of fiscal year or calendar year, January to March, WFE market trend has been shifted or pushed out. We thought the WFE market will increase, but actually now it's revised downward.

Koichi Yatsuda: On the FY basis, also on the dollar basis, the minus or negative 5% is expected compared with previous year. 5% increase on this calendar year basis. Minus 5% on the fiscal year basis. 3 months difference makes that big difference. That's correct. That's because of the outlook from January to March next year has been drastic changes. Yes. We thought you can see some increasing trend from January to March, and we thought we need to do some preparation because in the technology driver, we were expecting increasing trend from January to March. However, there is only actually the decreasing trend from January to March. The Q4 of fiscal year or calendar year, January to March, WFE market trend has been shifted or pushed out. We thought the WFE market will increase, but actually now it's revised downward.

The minus or negative 5% is expected compared with previous year, 5% increase on this calendar year basis, but minus 5% on the fiscal year basis. So three months' difference makes that big difference.

That's correct.

So that's because of the outlook from January to March next year has been directly changes yes.

We thought you can see some increasing trend from January to March and we so we need to do some preparation because in the technology driver we were expecting increasing trend from January to March however.

The inks.

The well there is only actually the decreasing trend from.

January to March.

The fourth quarter of fiscal year or cutting the ear January to.

March Wi Fi market trend has been shifted or pushed out.

We sold.

Dwt market will explode in place, but actually now is revised it downward.

When it comes to share.

Our share in the film.

Yatsuda: When it comes to share, our share in the SAM has been secured. Therefore, this is not negative or downward revision because of the decline in share. Each company made their own announcement. The timing of delivery or product mix are the reasons. Therefore, our share is not declined. I want to add this comment. I'm sorry. I answered to the previous question as well. Thank you very much. Thank you very much. I have one follow-up question. When you look at full-year basis, there is a possibility for positive growth. That's what you said. Some projects have been pushed out. Is that how you view the market trend? Some projects or some investment are canceled. How do you view the market situation? The semiconductor demand is expected to grow toward next year. That outlook hasn't changed at all. We have revised downward revision.

Koichi Yatsuda: When it comes to share, our share in the SAM has been secured. Therefore, this is not negative or downward revision because of the decline in share. Each company made their own announcement. The timing of delivery or product mix are the reasons. Therefore, our share is not declined. I want to add this comment. I'm sorry. I answered to the previous question as well. Thank you very much. Thank you very much. I have one follow-up question. When you look at full-year basis, there is a possibility for positive growth. That's what you said. Some projects have been pushed out. Is that how you view the market trend? Some projects or some investment are canceled. How do you view the market situation? The semiconductor demand is expected to grow toward next year. That outlook hasn't changed at all. We have revised downward revision.

Has been secured.

Therefore.

This is not negative or don't worry division because of the declining share.

Each company made with their own announcement, the timing of delivery where product mix are the reasons. Therefore, our share is not declined I want to add this comment.

I'm, sorry, I answer to the previous question as well.

Thank you very much.

Thank you very much.

I have one follow up question when you look at full year basis. There is the possibility for positive growth. That's what you said.

But some projects have been.

Pushed out.

Is that how you view the market trend or.

Some project.

Or some investment or canceled how do you view the market sufficient deep semiconductor demand.

Is expected grow towards next year.

And that outlook hasn't changed at all we have revised.

Done with revision.

Well.

So one of the reason is because the mezz.

Yatsuda: One of the reasons is the customer's approach to enhance productivity by improving yield. Customers are more aware of profitability by balancing supply-demand more effectively, and they try to shift from the proactive, aggressive investment to the solid investment, especially among logic customers. These are the major changes from our original previous outlook. When it comes to investment projects, there have been no cancellation at all. Maybe the delay should be 6 months at maximum. Thank you very much. Thank you very much for your question, Mr. Shimamoto. Next question is Mr. Yamamoto of Mizuho Securities. I am Yamamoto from Mizuho Securities. Can you hear me? Yes. Thank you. I have a very similar question. I'm sorry for that. 6 months delay you referred to.

Koichi Yatsuda: One of the reasons is the customer's approach to enhance productivity by improving yield. Customers are more aware of profitability by balancing supply-demand more effectively, and they try to shift from the proactive, aggressive investment to the solid investment, especially among logic customers. These are the major changes from our original previous outlook. When it comes to investment projects, there have been no cancellation at all. Maybe the delay should be 6 months at maximum. Thank you very much. Thank you very much for your question, Mr. Shimamoto. Next question is Mr. Yamamoto of Mizuho Securities. I am Yamamoto from Mizuho Securities. Can you hear me? Yes. Thank you. I have a very similar question. I'm sorry for that. 6 months delay you referred to.

Approach to enhance productivity by improving yield and customers are more there are perhaps the ability by balancing supply demand more effectively and.

They tried to shift from the proactive aggressive investment to the solid.

Investment, especially among allergic customers. So these are the major changes from our own as you know our previous outlook.

When it comes to investment project.

There had been no cancellation at all maybe the delay should be six month at maximum.

Yes.

Thank you very much.

Thank you very much for your question. Mr. Shimon model next question is Mr. Yamamoto of Mizuho Securities.

I am Yamamoto from Mizuho Securities can you hear me yes.

Thank you.

I have very similar question I'm sorry for that.

So six months delay you referred to but as for your company the first half and second half.

Yatsuda: As for your company, the first half and second half sales by application, could you give us some more information regarding the sales in the first and second half by application? DRAM, you can see some declining figures, but actually DRAM sales from the first and second half, your sales will be increasing. Non-memory, you expected to drastic increase from the first and second half, but actually it declined. Normally, you thought there is some increase from the first to second half, but actually the non-memory sales remain flat. Maybe for non-memory, deceleration is a major factor. You said on page 13, you said the first three are the major factors, and I think the non-memory is the number 3 factor. Actually when you look at figures, the amount is almost the same, but the change rate for non-memory is rather big or significant.

Koichi Yatsuda: As for your company, the first half and second half sales by application, could you give us some more information regarding the sales in the first and second half by application? DRAM, you can see some declining figures, but actually DRAM sales from the first and second half, your sales will be increasing. Non-memory, you expected to drastic increase from the first and second half, but actually it declined. Normally, you thought there is some increase from the first to second half, but actually the non-memory sales remain flat. Maybe for non-memory, deceleration is a major factor. You said on page 13, you said the first three are the major factors, and I think the non-memory is the number 3 factor. Actually when you look at figures, the amount is almost the same, but the change rate for non-memory is rather big or significant.

Sales by application could you give us some more information regarding the sales in the first and second half by application DRAM you can see some decline in figures, but actually I did himself from the first and second half your sales will be increasing and NAND sales you expect it to.

Drastic increase from the first and second.

Half, but actually it declined no mentally useful there is some increase from the first to second half, but actually the no memory from Astellas remain flat so maybe.

For NAND.

Yeah.

This valuation is a major factor you said on page 13, you said the first three are the major.

Factors and I think the number is the number three factor, but actually when you look the figures the amount is almost a thing.

But the change.

Change rate for NAND is rather base are significant.

Yeah.

So could you explain those figures please.

Yatsuda: Could you explain those figures, please? I think there are some specific issues for Tokyo Electron. Could you refer to page 15, please? Could you refer to page 15? On the left, you can see the sales by application for the second half of this fiscal year. The JPY 880 billion. On the right, you can see our announcement in April. The estimate announced April JPY 1,100 billion. The height of the bar chart, the change of the height of bar chart represents the changes or revision of our outlook. The green portion back in April, the height of green bars. When you refer to the left-hand side, the second half of this fiscal year, there is no change in proportion. However, height of the green bar is decreased because of the changes of the strategy by some logic customers.

Koichi Yatsuda: Could you explain those figures, please? I think there are some specific issues for Tokyo Electron. Could you refer to page 15, please? Could you refer to page 15? On the left, you can see the sales by application for the second half of this fiscal year. The JPY 880 billion. On the right, you can see our announcement in April. The estimate announced April JPY 1,100 billion. The height of the bar chart, the change of the height of bar chart represents the changes or revision of our outlook. The green portion back in April, the height of green bars. When you refer to the left-hand side, the second half of this fiscal year, there is no change in proportion. However, height of the green bar is decreased because of the changes of the strategy by some logic customers.

I think there are some specific issues for Tokyo electron.

So.

Cause you refer to page 15 please.

Please refer to page 15.

On the left you can see.

Yes.

The sales by application for the second half of this fiscal year.

The 880 billion yen on the right.

You can see our announcement in April.

They are announced.

April one treaty and 100 billion yen.

And the height of the Bar chart the change of the height a bar chart.

Represents.

The changes were a revision of our outlook.

The green portion.

Back in April.

The height of green bonds.

When you referred to.

The lift in sight.

Second half of this fiscal year. There is no change in propulsion. However, height of the Green bar is decreased because of the changes of the <unk>.

G by some logic customers demand.

You can see reduction.

Yatsuda: You can see reduction of purple portion 15% back in April. Now we expect an 11%. You can see. Height of the purple portion. That represents the amount. You can see the data of the previous fiscal year. As you can see, the width or height of purple is more than last year when you look at this fiscal year's purple portion. Supply-demand balance for non-memory is well closely watched by non-memory customer, and non-memory customer conducted some adjustment, and we have incorporated that adjustment made by the non-memory customers. The first half of next year is a kind of correction period. There are some differences between calendar year and fiscal year, but your company's new equipment application sales might be reduced in the first half of next fiscal year. Is that correct understanding?

Purple portion, 15% back in April However, now we expect an interim percentage.

Koichi Yatsuda: You can see reduction of purple portion 15% back in April. Now we expect an 11%. You can see. Height of the purple portion. That represents the amount. You can see the data of the previous fiscal year. As you can see, the width or height of purple is more than last year when you look at this fiscal year's purple portion. Supply-demand balance for non-memory is well closely watched by non-memory customer, and non-memory customer conducted some adjustment, and we have incorporated that adjustment made by the non-memory customers. The first half of next year is a kind of correction period. There are some differences between calendar year and fiscal year, but your company's new equipment application sales might be reduced in the first half of next fiscal year. Is that correct understanding?

So you can see height of the purple portion that represent the amount.

The data of the previous fiscal year as you can see the widows or height of purple is more of them.

Last year when you look at this fiscal year's Purple portion.

So subs.

Supply demand balance for NAND Isabel closely watched by NAND customer and non customer conducted some adjustment and we have incorporated that adjustment made by the NAND customers. The first half of next year is a kind of correction period. So there is some difference in <unk>.

Between calendar year and fiscal year, but your company's new up.

Equipment applications cells might be reduced in the first half of next fiscal year is that correct understanding.

Actually.

22 nanometer node the customer investment plan.

Yatsuda: Actually, toward 2nm node, the customer investment plan, not only one company, I think more customers will present their investment plan toward 2nm node. We want to closely watch the situation. It's so difficult to find that right timing. Thank you very much. Mr. Yamamoto, thank you very much for your question. Next question is from Kamisaki-san from Tokai Tokyo Intelligence Laboratory. I am Kamisaki from Tokai Tokyo. I have a question regarding emerging Chinese chip makers. WFE market assumption on calendar 2025, second half of calendar 2025, I think their investment is getting weaker. For the first half of calendar 2026, do you think the further reduction is expected in the first half of the calendar 2026 among the Chinese emerging chip makers? Annually, that's about $45 to 46 billion. I think that's the trend toward 2026. The legacy node market and.

Koichi Yatsuda: Actually, toward 2nm node, the customer investment plan, not only one company, I think more customers will present their investment plan toward 2nm node. We want to closely watch the situation. It's so difficult to find that right timing. Thank you very much. Mr. Yamamoto, thank you very much for your question. Next question is from Kamisaki-san from Tokai Tokyo Intelligence Laboratory. I am Kamisaki from Tokai Tokyo. I have a question regarding emerging Chinese chip makers. WFE market assumption on calendar 2025, second half of calendar 2025, I think their investment is getting weaker. For the first half of calendar 2026, do you think the further reduction is expected in the first half of the calendar 2026 among the Chinese emerging chip makers? Annually, that's about $45 to 46 billion. I think that's the trend toward 2026. The legacy node market and.

Not only one company I think more customers will present their investment plan towards two nanometer nodes. So you want to closely watch the situation.

It's so difficult to find the right timing.

Thank you very much.

Mr. Yamamoto. Thank you very much for your question next question is from.

Companies like some from Tokai, Tokyo intelligence luxury I am kind of music from Tokai Tokyo.

I have a question regarding imagine Chinese chipmakers.

Wi Fi market.

Assumption.

Called in the 2025 second half of calendar 2025, I think their investment is getting weaker.

So for the first half of calendar 2026 do.

Do you think the further reduction is expected.

In the first half of the calendar 'twenty six among the Chinese emerging chipmakers.

Yes.

So the annually that's about 45 to 46 billion.

I think that's the trend.

Tore it.

2026, the legacy note market.

And.

And the number of chip makers in China is rather a big there are so many emerging Chinese chipmakers I don't know the average.

Yatsuda: The number of chip makers in China is rather big. There are so many emerging Chinese chip makers. I don't know the average. It's a bit difficult for me to give you the answer. The WFE in China this year, $45 or $6 billion, I think the size of the WFE market remains unchanged. The entire WFE market is going up. The proportion of legacy will be declining next calendar year. For the new foundries, their yield has been improving, and now you can see more and more new foundries. Do you think so, or you don't see any new emerging foundries? So far, there is no such trend. If the emerging chip makers' yield is improving, the parts and service sales are expected to increase because their utilization rate goes up. However, so far we haven't seen such kind of trend.

Koichi Yatsuda: The number of chip makers in China is rather big. There are so many emerging Chinese chip makers. I don't know the average. It's a bit difficult for me to give you the answer. The WFE in China this year, $45 or $6 billion, I think the size of the WFE market remains unchanged. The entire WFE market is going up. The proportion of legacy will be declining next calendar year. For the new foundries, their yield has been improving, and now you can see more and more new foundries. Do you think so, or you don't see any new emerging foundries? So far, there is no such trend. If the emerging chip makers' yield is improving, the parts and service sales are expected to increase because their utilization rate goes up. However, so far we haven't seen such kind of trend.

It's a bit difficult for me to give you the answer.

But the Wi Fi in China this year.

$45 $6 billion I think.

The size of the resin market remain unchanged however, the entire WT market.

Is going up therefore, the proportion of legacy will be declining next calendar year.

So for the new foundries that yield has been improving and no. No you can see more and more new foundries do you think so or you don't see any new imaging.

Foundry is so far there is no such trend if the emerging chipmakers ear is improving.

So.

The parts and service sales are expected to increase because their utilization rate goes up. However, so far we haven't seen has kind of trend. Thank you very much.

Kind of like some thank you very much for your question.

Yatsuda: Thank you very much. Kamisaki-san, thank you very much for your question. The next question is given in English text, so let me read it out. The question is from Tami Kisan of Berenberg. The question is, what's the growth driver for second half 2026 regarding acceleration, please? Is your 2026 WFE estimation still unchanged? Also on China, has China spending bottomed after scaling back you have been seeing, or can it go down further? The three questions. As for your first question, the growth driver is AI server applications, the leading-edge logic for AI server and HBM.

Koichi Yatsuda: Thank you very much. Kamisaki-san, thank you very much for your question. The next question is given in English text, so let me read it out. The question is from Tami Kisan of Berenberg. The question is, what's the growth driver for second half 2026 regarding acceleration, please? Is your 2026 WFE estimation still unchanged? Also on China, has China spending bottomed after scaling back you have been seeing, or can it go down further? The three questions. As for your first question, the growth driver is AI server applications, the leading-edge logic for AI server and HBM.

The next question is given in English text, So let me read out the.

The question is from Tami Kisan of then bug asset management. The question is what's the growth driver for second half 'twenty 'twenty fixed regarding acceleration. Please.

Then is your 'twenty 'twenty six W. P estimation still unchanged also on China has China spending bottomed after scaling back you have in C or can it go down further.

The three questions first for your first question the growth driver.

Is a I server applications, the leading edge logic way I save an H B M.

When you refer to page 16.

Of their flight.

Yatsuda: When you refer to page 16 of the slide, as I said on page 16 of the slide, at present, the current device for AI server, 4 nanometer, two of the 4 nanometer node GPU are mounted right now, but in the future, 3 nanometer node GPU, four of them actually will be mounted in the future in calendar 2027. Now, there are 200 billion transistors right now. However, in 2027, two years from now, 500 billion transistors will be mounted. As for HBM, at present, there are 8 HBMs for 2 GPU to generate the memory capacity of 288 GB, but in year 2027, the memory capacity will increase to 1 terabyte. The 16 DRAM size to be stacked, and the number of layers will be increasing from 12 to 16. These are the major driver. What was the second question?

Koichi Yatsuda: When you refer to page 16 of the slide, as I said on page 16 of the slide, at present, the current device for AI server, 4 nanometer, two of the 4 nanometer node GPU are mounted right now, but in the future, 3 nanometer node GPU, four of them actually will be mounted in the future in calendar 2027. Now, there are 200 billion transistors right now. However, in 2027, two years from now, 500 billion transistors will be mounted. As for HBM, at present, there are 8 HBMs for 2 GPU to generate the memory capacity of 288 GB, but in year 2027, the memory capacity will increase to 1 terabyte. The 16 DRAM size to be stacked, and the number of layers will be increasing from 12 to 16. These are the major driver. What was the second question?

As I said on page 16 of the slide our present the current device Y S ever four nanometer two of the four nanometer node Gpus are mounted right now, but in the future three nanometer node Gpus full of them I'm sure he will be mounted in the future.

Sure.

In calendar 2027, now that a 200 billion transistors right. Now however in 2027 two years from now 500 billion transistors will be mounted as for H B M are present.

There are eight.

H B M four two GPU.

To generate the nominal capacity of 288 gigabyte, but in year 'twenty 'twenty seven day memory capacity will increase to one terabyte.

Kilobyte 16, drams dice to be stocked.

And.

The number of layers will be increasing from 12 to 16.

So these are the major driver.

Yeah.

What was the second question, Yes. The second question is is your 2026th of Delphi estimation still unchanged.

Yatsuda: Yes, the second question is your 2026 WFE estimation still unchanged? The 2026 WFE market outlook is under investigation right now. There is some delay from January to March 2026, but Q2 from April to June 2026, when we can see some recovery trend. We are now scrutinizing WFE market trend in calendar 2026, and we are now scrutinizing the situation. Anyway, 2027, you can see the steady increasing investment for AI server, and I think the preparation for such new innovation will start from the second half of the 2026 WFE market is expected to grow in later 2026. We want to analyze the situation more to come up with something more clear. The third question is regarding China. From last year to this year, WFE market in China has been shrinking.

Koichi Yatsuda: Yes, the second question is your 2026 WFE estimation still unchanged? The 2026 WFE market outlook is under investigation right now. There is some delay from January to March 2026, but Q2 from April to June 2026, when we can see some recovery trend. We are now scrutinizing WFE market trend in calendar 2026, and we are now scrutinizing the situation. Anyway, 2027, you can see the steady increasing investment for AI server, and I think the preparation for such new innovation will start from the second half of the 2026 WFE market is expected to grow in later 2026. We want to analyze the situation more to come up with something more clear. The third question is regarding China. From last year to this year, WFE market in China has been shrinking.

So 2026 debris of a market outlook is under.

Investigation right now.

There is some delay.

From January to March.

2026 by second quarter from April to June.

2026, when we can see some recovery trend. So we are no scrutinizing W. P market trend.

In calendar 2026.

And we are now scrutinizing the situation.

But anyway 2027.

You can see D.

Steady increasing investment for AI server and I think the preparation for such new innovation will start from the second half of the 2026 Wi Fi market is expected to grow in later 2026.

Want to analyze this ratio more to come up with something more clear.

The first question is regarding China from last year to this year.

So Wi Fi market in China has been shrinking do you think the Chinese WP market bottomed out or do you see some more decline in w's, they're if he market for Dx and gx semiconductor demand for digital transformation and when stress mutation will be increasing steadily.

Yatsuda: Do you think the Chinese WFE market bottomed out, or do you see some more decline in WFE market for DX and GX semiconductor demand for digital transformation and green transportation will be increasing steadily? The Chinese customers' self-sufficiency in China is not yet fulfilled in the Chinese market. At present, there are some struggles in power semiconductors. I think China proportion is about in the middle of the 30% level when WFE goes up. When it comes to amount, the Chinese market is also expected to grow. We don't see the further decline in the Chinese WFE market in the future. Thank you very much for your question. Next question is from Yoshioka-san from Nomura Securities. Thank you very much. I am Yoshioka from Nomura Securities. Can you hear me? Yes, I can hear you. WFE market and TEL growth potential.

Koichi Yatsuda: Do you think the Chinese WFE market bottomed out, or do you see some more decline in WFE market for DX and GX semiconductor demand for digital transformation and green transportation will be increasing steadily? The Chinese customers' self-sufficiency in China is not yet fulfilled in the Chinese market. At present, there are some struggles in power semiconductors. I think China proportion is about in the middle of the 30% level when WFE goes up. When it comes to amount, the Chinese market is also expected to grow. We don't see the further decline in the Chinese WFE market in the future. Thank you very much for your question. Next question is from Yoshioka-san from Nomura Securities. Thank you very much. I am Yoshioka from Nomura Securities. Can you hear me? Yes, I can hear you. WFE market and TEL growth potential.

And.

The Chinese customers.

Yeah.

Self sufficiency in China is not yet.

Fulfilled.

In Chinese market.

And at present, there are some struggle empower semiconductors I think China proportion is about 30 in the middle of the 30% level when Wi Fi goes up when it comes to a month.

Chinese market is also expected to grow.

So we don't see the further declining Chinese WP market in the future.

Thank you very much for your question next question is from Yoshioka. Some from Nomura Securities. Thank you very much I am Yoshioka from Nomura Securities can you hear me.

Yes, I can hear you.

So Wi Fi market.

And tell growth potential. This is what I want to ask festival FY 'twenty six.

Yatsuda: This is what I want to ask. First of all, FY26 or fiscal year ending March 2026, you have made the downward revision. -5%. What was the figure three months ago announcement? After that, after you tell me, what about this fiscal year? You said that Tokyo Electron sales will decrease by 3%. That means your company outperformed the WFE market. When it comes to the fiscal 2027, do you think you can outperform the WFE market? Are there any differences between TEL's potential for growth and WFE market trend? Our mid-term management plan 2027 is a target year of our mid-term management plan and product mix and timing of delivery. When it comes to our earning power, our company's earning power is getting stronger and stronger. Gartner made an announcement April this year for the share.

Koichi Yatsuda: This is what I want to ask. First of all, FY26 or fiscal year ending March 2026, you have made the downward revision. -5%. What was the figure three months ago announcement? After that, after you tell me, what about this fiscal year? You said that Tokyo Electron sales will decrease by 3%. That means your company outperformed the WFE market. When it comes to the fiscal 2027, do you think you can outperform the WFE market? Are there any differences between TEL's potential for growth and WFE market trend? Our mid-term management plan 2027 is a target year of our mid-term management plan and product mix and timing of delivery. When it comes to our earning power, our company's earning power is getting stronger and stronger. Gartner made an announcement April this year for the share.

For fiscal year, ending March 2020 is fixed now you have.

Meet the downward revision minus 5% what was the figure three months ago announcement.

And after that after you tell me what about this fiscal year.

You said that Tokyo restaurant sales will decrease by 3% that means your company outperformed the WP, Mike it but when it comes to the fiscal 2027.

Do you think you can outperform that if he might get.

Are there any difference between tell us potential for growth and WP market trend.

So our midterm management plan.

2027 is a target year of our midterm management plan and product mix and timing of delivery.

Yeah.

So that is snap consistent trend.

But when it comes to our earning power are a company's earning power is.

Getting stronger and stronger so Gartner made announcement April this year.

For the share when it comes to the Wi Fi market.

The calendar year.

Yatsuda: When it comes to the WFE market, the calendar year, the growth rate is 5.6%. Our company's growth rate was 23%. Therefore, especially our etch sales increased and coater/developer share is increased from 90% and farther higher and 3D integration bonder, actually our sales of Bonder/Debonder has been increased by three times over the past 2 years. Our earning power is getting stronger steadily. Because of that, 5 years ago, our gross profit margin was 40%, but recently our gross profit margin has increased by about 5 percentage points. The gross profit is exceeding JPY 1 trillion for 2 years in a row. Needless to say, regulations have some impact. The high value-added product cannot be delivered to the Chinese market, as Wadaki-san said in his question.

Koichi Yatsuda: When it comes to the WFE market, the calendar year, the growth rate is 5.6%. Our company's growth rate was 23%. Therefore, especially our etch sales increased and coater/developer share is increased from 90% and farther higher and 3D integration bonder, actually our sales of Bonder/Debonder has been increased by three times over the past 2 years. Our earning power is getting stronger steadily. Because of that, 5 years ago, our gross profit margin was 40%, but recently our gross profit margin has increased by about 5 percentage points. The gross profit is exceeding JPY 1 trillion for 2 years in a row. Needless to say, regulations have some impact. The high value-added product cannot be delivered to the Chinese market, as Wadaki-san said in his question.

Growth rate is five 6%.

And our company's growth rate was 23%.

Therefore.

It's especially our edge sales increased.

And quarter double ARPA.

Sure is increased from 90% in father higher and three D in English and Banda the Bonder.

Surely ourselves of Bonder. The bone there has been increased by three times over the past two years.

So our earning power is getting stronger.

Steadily because of that.

Five years ago, our gross profit margin was 40%, but recently our gross profit margin has increased by about five five percentage point.

So the gross profit is.

Exceeding one treaty I'm Yan for two years in a row.

Yes.

Needless to say.

Regulations have some impact.

High value added product cannot be delivered to the Chinese market as Fedex Sunset in his question.

And geopolitical.

Impacts and inflation impacts are also observed but our gross profit exceed one.

Yatsuda: Geopolitical impacts and inflation impacts are also observed, but our gross profit exceeds JPY 1 trillion for two years in a row, and our gross profit margin has increased by 5 percentage points over the past five years, and our share has been increasing. Our share and profit growth, both of those two factors are improving steadily despite the geopolitical factors. Maybe next fiscal year, we will closely see whether we can achieve those figures, but it is clear that our earning power is improving steadily. Also, ROE, 30% or more. Last year, we achieved 30.3% ROE, we achieved our mid-term management goal two years ahead of the target year. If the sales come back, we are able to achieve the figures or targets of the mid-term management plan sometime in the future. The mid-term management plan is not the final goal.

Koichi Yatsuda: Geopolitical impacts and inflation impacts are also observed, but our gross profit exceeds JPY 1 trillion for two years in a row, and our gross profit margin has increased by 5 percentage points over the past five years, and our share has been increasing. Our share and profit growth, both of those two factors are improving steadily despite the geopolitical factors. Maybe next fiscal year, we will closely see whether we can achieve those figures, but it is clear that our earning power is improving steadily. Also, ROE, 30% or more. Last year, we achieved 30.3% ROE, we achieved our mid-term management goal two years ahead of the target year. If the sales come back, we are able to achieve the figures or targets of the mid-term management plan sometime in the future. The mid-term management plan is not the final goal.

<unk> for two years in a row and our gross profit margin has increased by five percentage points over the past five years and our share has been increasing so our share and profit growth both of those two factors are improving steadily.

Despite of the geopolitical factors, maybe next fiscal year.

Don.

Which most closely to see whether we can achieve those figures, but it is clear that our earnings power is improving city also our O E C.

30% more than last year, we achieved 33% although E. So we achieved our mid term management goal two years ahead of the target here.

So if the sales come back.

We are able to achieve.

The figure is or targets of mid term management.

Plant sometime in the future.

And midterm management plan is not the final go is the kind of interim Gulf.

Gulf of loss.

Yatsuda: It's a kind of interim goal for us. On the FY basis, we haven't disclosed information of the WFE market on the FY fiscal year basis. Thank you very much. FY2027, WFE market growth and Tokyo Electron's sales are almost comparable. Yes, of course, we won't be below the WFE market growth in fiscal 2027. I think we can outperform the WFE market also in the fiscal 2027. Thank you very much, Mr. Yoshioka, for your question. Next question is Mr. Nakanomyo of Jefferies Japan Limited. Thank you very much. On page 13, I'm sorry, repeat the same question once again. I try to improve my understanding. Some leading-edge logic customers are revising their CapEx plan. You may not be able to talk about a specific customer, but three major customers, originally two logic customers, didn't change their investment so much.

Koichi Yatsuda: It's a kind of interim goal for us. On the FY basis, we haven't disclosed information of the WFE market on the FY fiscal year basis. Thank you very much. FY2027, WFE market growth and Tokyo Electron's sales are almost comparable. Yes, of course, we won't be below the WFE market growth in fiscal 2027. I think we can outperform the WFE market also in the fiscal 2027. Thank you very much, Mr. Yoshioka, for your question. Next question is Mr. Nakanomyo of Jefferies Japan Limited. Thank you very much. On page 13, I'm sorry, repeat the same question once again. I try to improve my understanding. Some leading-edge logic customers are revising their CapEx plan. You may not be able to talk about a specific customer, but three major customers, originally two logic customers, didn't change their investment so much.

Sure.

So on the FY basis, we havent disclosed information of the Wi Fi market on a flight fiscal year basis. So.

Thank you very much.

So FY 2027.

Wi Fi market.

Gross.

And Taco restaurants.

Sales are almost comparable yes of course, we wont be.

Laurent be below double every market growth in fiscal 'twenty does happen I think we cannot file form W. A free market also in the fiscal 2027. Thank you very much Mr. His yoga for your question next question is Mr. Nakano meal of Jefferies, Japan images.

Thank you very much.

On page 13.

I'm sorry repeat the same question once again I try to improve my understanding.

So some leading edge logic customers are revising their capex plans.

Yes.

So you may not be able to talk about specific customer when in three major customers originally to logic customers.

Didn't change there.

Investment so much.

In that sense.

The active investment made by only one logic customer and that particular logic customer has changed their investment planned for January to March 2027, or do you think to the other two logic.

Yatsuda: In that sense, the active investment made by only one logic customer and that particular logic customer has changed their investment plan for January to March 2027, or do you think two, the other two logic customers' investment plan will be deferred furthermore? It's a bit difficult to make that comment. I think your second option is more likely. The capital efficiency improves for the one major logic customer. Your business is rather getting smaller. No, that doesn't happen. January to March next year, it's six months ahead. Now you have revised your outlook. That means the changes in January to March are rather clear or realistic. Now various customers and some top management have been changed, the new top management issue, the new policy or direction. Some customers' financial announcements are made, and we have incorporated all those factors.

Koichi Yatsuda: In that sense, the active investment made by only one logic customer and that particular logic customer has changed their investment plan for January to March 2027, or do you think two, the other two logic customers' investment plan will be deferred furthermore? It's a bit difficult to make that comment. I think your second option is more likely. The capital efficiency improves for the one major logic customer. Your business is rather getting smaller. No, that doesn't happen. January to March next year, it's six months ahead. Now you have revised your outlook. That means the changes in January to March are rather clear or realistic. Now various customers and some top management have been changed, the new top management issue, the new policy or direction. Some customers' financial announcements are made, and we have incorporated all those factors.

Customers are investment plan will be deferred. Furthermore.

It's a bit difficult to make that comment.

I think there is.

Your second option is more likely.

So.

They kept capital efficiency improves for the one major logic customer.

And your business is weather.

Getting smaller known that doesn't happen.

And month January to March next year.

It's six months ahead.

And now you have revised your outlook that means the changes in January two.

March.

Is rather clear or realistic.

So now our various customers in some top management had been changed in your top management issue than your policy or direction.

And some customers financial's announcement.

Are made and we have incorporated all those factors.

And number four H B M.

Yatsuda: Number four, HBM investment. Again, the investment efficiency gets better, and investment for HBM is not increasing so much. Scaling of DDR5 improves investment efficiency. Only the matter of timing of investment. Semiconductor demand itself is growing. Toward 2030, the semiconductor market is expected to grow to $1 trillion. There is no major change at all for this major trend. 2027, the new device for server will be spreading furthermore. There is no change in the growing trend of the semiconductor market or demand. In that sense, there have been no changes compared with the previous guide outlook, but customers' technology, production technology is improved because of that, some revisions were made. Our short-term financial estimate has been revised downward, and that portion has the negative impacts.

H B M.

Koichi Yatsuda: Number four, HBM investment. Again, the investment efficiency gets better, and investment for HBM is not increasing so much. Scaling of DDR5 improves investment efficiency. Only the matter of timing of investment. Semiconductor demand itself is growing. Toward 2030, the semiconductor market is expected to grow to $1 trillion. There is no major change at all for this major trend. 2027, the new device for server will be spreading furthermore. There is no change in the growing trend of the semiconductor market or demand. In that sense, there have been no changes compared with the previous guide outlook, but customers' technology, production technology is improved because of that, some revisions were made. Our short-term financial estimate has been revised downward, and that portion has the negative impacts.

Investment.

And again the cabinet.

Investment efficiency gets better and investment for H B M. It's not increasing.

So much.

We're scaling of DDR five improve investment efficiency.

What in only the matter of timing of investment.

So semiconductor demand itself is growing.

Throughout his 23rd.

T J semiconductor market is expected to grow to $1 billion. There is no major no change it at all for this measure trend for 2027.

The new device for server will be spreading Furthermore.

So there is no change in the growing trend of semiconductor market or demand.

So in that sense, there have been no changes compared with the previous guide.

Outlook, but customers technology.

Production technology is improved because of that some revision where meat.

Our Showtime.

Financial estimate has been revised downward and that portion.

Is it.

Has the negative impacts.

Hi ever on the other hand.

The investment.

Yatsuda: However, on the other hand, the investment, actually, customers closely watch supply-demand balance. Customers are more focusing on profitability, they try to improve productivity, and they are improving their yield so they can produce chips with low cost. Now for mid-term, long-term perspective, these factors have positive impact to further drive the growth in mid and longer-term perspective because of the technology innovation. As for the financial estimate, maybe we might have some impact for 6 months. There are some symptoms, and we'd like to address the capital market properly. Because we become aware of this kind of trend, we decided to make this announcement. Thank you very much for your question, Mr. Nakanomyo. Next question is Mr. Shibano of Citigroup Global Markets Japan. Thank you very much for your presentation. I am Shibano of Citigroup Global Markets Japan.

Koichi Yatsuda: However, on the other hand, the investment, actually, customers closely watch supply-demand balance. Customers are more focusing on profitability, they try to improve productivity, and they are improving their yield so they can produce chips with low cost. Now for mid-term, long-term perspective, these factors have positive impact to further drive the growth in mid and longer-term perspective because of the technology innovation. As for the financial estimate, maybe we might have some impact for 6 months. There are some symptoms, and we'd like to address the capital market properly. Because we become aware of this kind of trend, we decided to make this announcement. Thank you very much for your question, Mr. Nakanomyo. Next question is Mr. Shibano of Citigroup Global Markets Japan. Thank you very much for your presentation. I am Shibano of Citigroup Global Markets Japan.

Actually customers are closely watch supply demand balance and customers are more focusing on profitability and they try to improve productivity and they are improving there.

Yield so they can produce chips with low cost.

So now for long term long term perspective. These factors have positive impact to further drive the growth in meat and longer term perspective because of the.

Technology innovation.

So as for the financial estimates.

Maybe.

We might have some impact.

For six months and there are some symptoms and we strive to address to the capital market properly.

And because we are.

Become aware of this kind of trend we decided to make this announcement.

Thank you very much for your question Mr. Economical and his question is Mr. Shabaneh of Citigroup Global markets, Japan. Thank you very much for your presentation I am Shibanna of Citigroup Global markets Japan.

For the core tree.

Yatsuda: For the quarterly performance improvement or momentum for the further improvement of your financial performance, the quarterly sales, Q4 should be the bottom. Is that correct understanding? When it comes, there is no quantitative disclosure. I understand that. When it comes to qualitative manner, in terms of orders, do you see some decreasing trend in orders? Let's say the July-September period should be the bottom period. Is that correct understanding? The bottom period, we should investigate to scrutinize furthermore. I think January-March period is very close to the bottom. We should study more to see what happens in what will happen in April-June. That might be some delay by three months or six months. In the second half of 2027, we will see a new device for AI server.

Koichi Yatsuda: For the quarterly performance improvement or momentum for the further improvement of your financial performance, the quarterly sales, Q4 should be the bottom. Is that correct understanding? When it comes, there is no quantitative disclosure. I understand that. When it comes to qualitative manner, in terms of orders, do you see some decreasing trend in orders? Let's say the July-September period should be the bottom period. Is that correct understanding? The bottom period, we should investigate to scrutinize furthermore. I think January-March period is very close to the bottom. We should study more to see what happens in what will happen in April-June. That might be some delay by three months or six months. In the second half of 2027, we will see a new device for AI server.

Performance improvement or momentum for the further improvement of your financial performance So the quarter itself.

The fourth quarter should be the bottom.

Is that correct understanding.

And when there is no quantitative disclosure I understand that when it comes to quantitative manner in terms of orders do you see some decrease in trending orders, let's say the July September period should be the bottom period is that correct understanding.

So the bottom period, we should investigate.

So creating that Furthermore, I think January March period is very close to the bottom.

We should study more to see.

What happens then what will happen.

April two.

June that might be some delay by three months or six months, but in the second half of 2027.

We will see a new device food AI server when you think about that new device.

There is a possibility to have the sudden.

Yatsuda: When you think about that new device, there is a possibility to have the sudden increase or growth in the market. We also need to watch the enhancement of customers' yield. Thank you very much. You talked about mid-term management plan. When you answered to the question of Mr. Yoshioka, I have one follow-up question. For FY2027, is the target year of mid-term management plan? Six months ago, maybe you said you can achieve the net sales of JPY 3 trillion. Do you think there are some changes in that prospect or external environment has been changed over the past three years? Not only the most recent changes, but I think overall trend has been changed. Would you like to refresh your grand targets or you don't think there is no need to revise the mid-term management plan?

Koichi Yatsuda: When you think about that new device, there is a possibility to have the sudden increase or growth in the market. We also need to watch the enhancement of customers' yield. Thank you very much. You talked about mid-term management plan. When you answered to the question of Mr. Yoshioka, I have one follow-up question. For FY2027, is the target year of mid-term management plan? Six months ago, maybe you said you can achieve the net sales of JPY 3 trillion. Do you think there are some changes in that prospect or external environment has been changed over the past three years? Not only the most recent changes, but I think overall trend has been changed. Would you like to refresh your grand targets or you don't think there is no need to revise the mid-term management plan?

Increase or growth in the market.

So well, we also need to watch the enhancement of customers' ear.

Thank you very much.

You talked about midterm management plan when you answer to the question of Mr. Mission Yoshioka I have one follow up question for FY.

If by 2027 is the target here of midterm management plan. So six months ago. So maybe it use it you can achieve the net sales of three trillion yen and do you think there are some changes in that prospect or external environment has been changed over the past three years and not.

Only the recent most recent changes, but I think overall the trend has been changed so as you would you like to refresh your group.

Brown targets or you don't think there is no need to revise the midterm management plan when income I think the approach to the fixed cost and reimbursement has been changed how do you view the current fleet management plan.

Yatsuda: When it comes, I think the approach to the fixed cost and investment has been changed. How do you view the current mid-term management plan? As I said a little bit earlier, now you can see improvement of the gross profit margin and our share has been improving. New products, process of record, POR, or qualification by the customer has been acquired. There are quite a few good positive factors because of that. Now there is a kind of delay by 6 months and we try to find out the magnitude of impacts. For mid-term management plan, maybe fiscal 2027 or 2028, ever since the announcement of our current mid-term management plan, there have been many changes in terms of geopolitics. We are making steady progress in our business and we are keeping the investment for further growth in the future.

Koichi Yatsuda: When it comes, I think the approach to the fixed cost and investment has been changed. How do you view the current mid-term management plan? As I said a little bit earlier, now you can see improvement of the gross profit margin and our share has been improving. New products, process of record, POR, or qualification by the customer has been acquired. There are quite a few good positive factors because of that. Now there is a kind of delay by 6 months and we try to find out the magnitude of impacts. For mid-term management plan, maybe fiscal 2027 or 2028, ever since the announcement of our current mid-term management plan, there have been many changes in terms of geopolitics. We are making steady progress in our business and we are keeping the investment for further growth in the future.

Yeah.

As I said, a little bit earlier. So now you can see improvement of the gross profit margin and our share has been improving and new products.

Chris It's a bracket P O R or qualification by the customer has been a quiet.

So there are quite a few good positive factors because of that so now there is a kind of delayed by six months and we try to find out the magnitude of impact but for midterm management plan.

Fiscal 2027 or 2028 ever since the announcement of our current midterm management plan there have been many changes in terms of geopolitics.

Yeah.

But.

We are making steady progress in our business.

And we are keeping.

The investment for further growth in the future.

And there is high expectations further technology innovation. Therefore, we have no intention to revise our midterm management plan. The only thing is the timing for achievement of midterm management plan with.

Yatsuda: There is high expectation for further technology innovation. Therefore, we have no intention to revise our mid-term management plan. The only thing is the timing for achievement of mid-term management plan. We'll be affected by the WFE market trend to some extent. When the WFE market reaches a certain level, we are sure to achieve the targets. Thank you very much, Mr. Your question. Actually, one more question. The question is from Varun Rajwanshi from Lazard Asset Management. The question is, can you please make a comment on your market share excluding China? Are there areas where Tokyo Electron is losing share? Your sales outlook for this fiscal year is much worse versus what peers are suggesting. First of all, among different applications, the leading-edge area, we don't lose shares in the advanced areas.

Koichi Yatsuda: There is high expectation for further technology innovation. Therefore, we have no intention to revise our mid-term management plan. The only thing is the timing for achievement of mid-term management plan. We'll be affected by the WFE market trend to some extent. When the WFE market reaches a certain level, we are sure to achieve the targets. Thank you very much, Mr. Your question. Actually, one more question. The question is from Varun Rajwanshi from Lazard Asset Management. The question is, can you please make a comment on your market share excluding China? Are there areas where Tokyo Electron is losing share? Your sales outlook for this fiscal year is much worse versus what peers are suggesting. First of all, among different applications, the leading-edge area, we don't lose shares in the advanced areas.

They'll be affected by deputy seem like a trend to some extent.

But when the beauty market reaches a certain level.

We are sure to achieve the targets.

Thank you very much Mr. <unk> your question actually one more question.

The question is from.

But.

No just because you won't see from Lazard asset management. The question is can you. Please make a comment on your market share excluding China are there areas, where I thought good of thrown us losing chair your sales outlook for this fiscal year is much worse versus.

What peers are suggesting.

First of all.

Yeah.

Among the different.

Applications.

<unk>, leading edge area, they don't lose shares in the advanced areas.

Partially.

In China.

Yatsuda: Partially in China, the general purpose or legacy node devices, because of the Chinese government policy, the Chinese two vendors are improving their share. That's true. Last year, WFE market analysis announced by Gartner, the WFE market grew by 5.7% on average. Tokyo Electron grew by more than 23%. Despite weak yen, the growth rate of 23% or more is very outstanding. Actually, three Chinese companies are among the top 20. Some of their sales growth rate is more than 40%. In the Chinese legacy market, our share in that Chinese legacy market has been declining slightly. However, when it comes to the volume zone for our further growth, that is cutting-edge technology area, we keep our share. Compared with our peers, there might be some strong negative impacts. Some companies may have stronger figures for share in this year.

Koichi Yatsuda: Partially in China, the general purpose or legacy node devices, because of the Chinese government policy, the Chinese two vendors are improving their share. That's true. Last year, WFE market analysis announced by Gartner, the WFE market grew by 5.7% on average. Tokyo Electron grew by more than 23%. Despite weak yen, the growth rate of 23% or more is very outstanding. Actually, three Chinese companies are among the top 20. Some of their sales growth rate is more than 40%. In the Chinese legacy market, our share in that Chinese legacy market has been declining slightly. However, when it comes to the volume zone for our further growth, that is cutting-edge technology area, we keep our share. Compared with our peers, there might be some strong negative impacts. Some companies may have stronger figures for share in this year.

The general purpose, while legacy node devices because of the Chinese government policy.

Denise two vendors are improving their share.

That's true.

Last year.

Wi Fi market.

Analysis announced by Gartner.

The Wi Fi market grew by five 7% on average.

So it got extra and grew by more than 23% despite weak yen the growth rate of 23% or more is very outstanding.

And actually three Chinese companies among the top 20 and.

Some of their sales growth rate is more than 40% in the Chinese legacy market, the our share in that Chinese or that the market has been declining slightly.

However, when it comes to the volume zone.

For our further growth that is cutting edge technology area, we keep our.

Sure.

Compared with our peers.

Yeah.

There might be some strong negative impact some companies may have stronger figures for.

Sure in this year that is because of product mix and the timing of delivery.

Yatsuda: That is because of product mix and the timing of delivery. In our existing markets, we don't lose our market share at all in the leading-edge area. Thank you very much for your question. It is time for us to close today's conference. Before closing, however, I'd like to make an announcement. SEMICON West will be held in Phoenix, Arizona, for three days from 7 October to 9 October 2025. On day one, 7 October, Tokyo Electron will organize Fireside Chat from 1:00 PM, joined by Mr. Kawai, Mr. Akiyama, Mr. Ishida, and Mr. Sekiguchi. In this event, we plan to discuss our mid-term and long-term business opportunities and growth potential. If you go to SEMICON West, please join us in this event. We will send you the details later. Lastly, we'd like to continue to improve our IR activities based on your precious feedback.

Koichi Yatsuda: That is because of product mix and the timing of delivery. In our existing markets, we don't lose our market share at all in the leading-edge area. Thank you very much for your question. It is time for us to close today's conference. Before closing, however, I'd like to make an announcement. SEMICON West will be held in Phoenix, Arizona, for three days from 7 October to 9 October 2025. On day one, 7 October, Tokyo Electron will organize Fireside Chat from 1:00 PM, joined by Mr. Kawai, Mr. Akiyama, Mr. Ishida, and Mr. Sekiguchi. In this event, we plan to discuss our mid-term and long-term business opportunities and growth potential. If you go to SEMICON West, please join us in this event. We will send you the details later. Lastly, we'd like to continue to improve our IR activities based on your precious feedback.

But in our existing markets, but we don't lose our market share at all in the leading edge area.

Thank you very much for your question.

Yeah.

So with sleep.

It is simple as to close today's conference before closing, however, I'd like to make an announcement semicon west will be held in Phoenix, Arizona for three days from October. This F. The ninth 2025 on day, one October seven thought good afternoon, we'll organize fireside chat from one o'clock.

Joined by Mr. <unk>, Mr. <unk> MA Mr Shudder and Mr. Ticked ski Gucci in this event, we plan to discuss our midterm and long term business opportunities and growth potential. If you go to semicon West. Please join us in this event, we will send you the details later.

And lastly, we'd like to continue to improve our I R activities based on your patient feedback. So we would like I appreciate youre kind cooperation in filling out the question here before you exit the website webex. Thank you very much for taking time to join this conference. Despite your busy schedule today. Thank you very much.

Yatsuda: We would appreciate your kind cooperation in filling out the questionnaire before you exit the Webex. Thank you very much for taking time to join this conference despite your busy schedule today. Thank you very much.

Koichi Yatsuda: We would appreciate your kind cooperation in filling out the questionnaire before you exit the Webex. Thank you very much for taking time to join this conference despite your busy schedule today. Thank you very much.