Earnings Release

3Q FY2014 Earnings Release Conference Q&A

  • What is the order forecast for the January to March 2014 quarter?

    The general direction that we anticipate is for SPE orders to remain at about the same level as in the previous quarter.

  • What is the order forecast for the April to June 2014 quarter and later?

    We expect that capital investment in wafer fab equipment (WFE) will increase 10% in 2014 compared to previous year, and that the growth rate in the fiscal year will be about the same. Although there is some uncertainty concerning the second half of the next fiscal year, we do not think that orders will decline.

  • What are the relative strengths of inquiries by product types?

    Inquiries concerning our main products — coater/developers, etch systems, and thermal processing systems — are strong. Orders for cleaning systems also have a very strong momentum, and we expect sales to increase in the future.

  • What was the status of post-sales orders in the October to December 2013 quarter?

    From a sales perspective, we project that sales from post-sales business will be up 10% in the current fiscal year from the previous year to 120 billion yen. Sales from equipment modifications and other services are increasing in conjunction with the reuse of equipment, and we will seek to increase sales from post-sales business to the 150 billion yen range in the future.

  • You expect the WFE market to increase by 10% in 2014, but what is the breakdown for logic and memory?

    Investment appetite of logic customers remains steady. In terms of growth rates, however, we expect that investment in both DRAM and NAND memory will increase.

  • Compared to the 10% growth of WFE in 2014, can you expect even higher growth in sales and market share?

    We expect that our market shares for some products will increase and that the overall trend will be in the upwards direction.

  • Why did the gross profit margin in the October to December 2013 quarter increase to 36.4%, a very high level?

    Our expenses tend to be incurred more in the fourth quarter than the third quarter of the fiscal year, but even so the gross profit margin was very high in the third quarter. The main causes were higher plant utilization rates in conjunction with an increase in orders and lower fixed costs as a result of reporting some plant fixed costs as product inventory. Also, the fourth quarter gross profit margin may appear low compared to the third quarter, but overall the gross profit margin is improving. The marginal profit rate is also increasing.

  • R&D expenses have been increasing, both in actual amount and as a percentage of sales; what are your thoughts on R&D expenses over the next several years? Also, how much of a decrease in R&D expenses can you expect as a result of the merger with AMAT?

    We do not manage R&D expenses based on the percentage of sales, but have made investments that are strategically necessary. We are in an industry that requires a certain level of continuous investment, but we will control R&D expenses while monitoring profit margins. We are not yet at a stage where we can discuss R&D expenses following the merger.

  • Supposing there are few overlapping products and no reductions in personnel in Japan, it appears that achieving the $500 million in synergy effects will be difficult. How feasible is achieving that objective?

    The synergy effects are by no means a simple issue, but we do not believe that the hurdles are too high. We believe that we will be able to reduce duplicative expenses in each country and region by raising efficiency in the supply chain, optimizing sales and services facility operations, and taking other measures.

  • Will the massive extraordinary loss recognized in 3Q FY2014 have an impact on the merger ratio?

    There will not be any effect on the merger ratio.