Q&A on First Quarter Results for the Fiscal Year Ending March 2011

Although sales were down around 5.5 billion yen on the April-June period compared to the January-March period, operating income margins improved. How do you account for this?

One factor is that a proportion of SPE sales which have higher profit margin increased. Also, in the previous period we wrote off inventory to the value of around 4 billion yen, which was not occurred in this period.

What is the outlook for orders in the July-September period in 2010?

With SPE and FPD/PVE combined, we are expecting an increase of 10% - 20% compared to the April-June period.
We foresee that SPE orders will continue at their current high level, and orders for FPD/PVEs will be 20-25 billion yen.

What is the market outlook for the October-December period and beyond?

Some people are talking about a possible drop in DRAM prices. However, for NAND and LOGIC, as far as we can tell from what our customers are saying, growth looks set to continue in the medium to long term.

Where do you see industries such as SPE and FPD/PVE going from here?

The SPE industry incorporates a variety of technologies including electronics, mechatronics, and chemicals. Provided that progress in semiconductors continues, we think that strong demand will continue to support growth in the industry. The PVE market also looks promising when viewed in the medium to long term. With regard to LED production equipment market, too, we believe there is still plenty of room for improvement since current equipment performance has yet to be sufficient. SPEs are also showing further growth, and there are several interesting areas relating to the future development of applied technologies based on SPE technologies.

You mentioned that you were going to strengthen your etching systems and cleaning systems business. What progress have you made? Are you worried about price competition?

With regard to etching systems, we have released a new product which makes use of a new plasma source called RLSA. As this product is technologically differentiated from competitors, we are confident that customers will rate it highly. So, in the medium term, we are aiming to increase our share of silicon etching systems through upgrades to our existing products and this RLSA etching system.
With regard to cleaning systems, our products have a strong reputation for drying performance. We are going to add to our competitiveness by making further improvements in areas such as throughput. On the subject of pricing, we are making constant efforts to ensure that customers understand the value of our systems and are prepared to purchase them on that basis. Although exceptions can be made in the case of strategic sales, as a company we are not interested in acquiring market share by lowering our prices.

What profit margin are you aiming for?

As a company, we are aiming for an operating income margin of 20% as the interim goal to beat our previous record.

What is your view on TEL with regard to EUV?

Although EUV launch is a little delayed compared to the initial technology road map, we anticipate that the industry will overcome various technological problems, and that the era of EUV will come sooner or later. Through our coater/developers, we are deeply involved in EUV research and development, and are preparing to supply our systems from a dominant position in the EUV era.

What are your thoughts on TEL with regard to the 450 mm wafers?

In the industry, there are still a number of unclear factors, such as whether there is enough demand for 450mm systems to enable collection of the enormous development funds. At present, it is difficult to take a strong position on this. At the same time, we expect that the era of 450 mm wafers will arrive at some stage to support the ever-widening demand for semiconductors, so we will have to take steps to undertake the necessary preparations.