Earnings Release

3Q FY2016 Earnings Release Conference Q&A

  • What factors caused orders to increase more than expected in the October to December quarter?

    Foundry and 3D NAND orders increased. Orders being brought forward from January was the main reason for this.

  • Can you provide a breakdown of the increase in South Korean orders in the October to December quarter?

    DRAM and 3D NAND orders increased beyond our expectations. Logic orders also increased compared to the July to September quarter.

  • The company has retained its earnings forecasts for FY2016, but is it likely that sales in the January to March quarter will increase as usual and that this fiscal year's earnings will exceed the forecast?

    We expect them to end up in line with our financial estimates.

  • There is a consensus that the WFE market will head downward year-on-year in CY2016. What are the reasons for expecting it to be at the same level as last year?

    As 3D NAND capex will definitely increase, we believe this will compensate for a decline in DRAM capex. Furthermore, investment in logic and foundry was constrained in CY2015, but we expect it to recover in CY2016, and so the WFE market could also increase compared to last year.

  • To what extent will 3D NAND investment account for NAND investment in CY2016?

    We believe it will account for more than 70% and it should tend to rise from 2017 onward as well.

  • What challenges are there in the Patterning Solution Project?

    Besides patterning, a proposal that goes beyond the boundaries of equipment groups has been requested, and so we will strengthen cross-sectional functions.

  • In which fields will the effects of integrating development teams emerge rapidly?

    In future technology innovation, we will put priority on fields that customers consider to be challenges. The importance of joint development with customers is increasing, and we will ascertain the impediment factors for the technological innovation of the generation after the next and subsequent generation and allocate all our resources there. So far, we have developed as many as 150 elemental technologies. We will carefully examine their order of priority and accelerate development plans by focusing on strategic products. Our aim is to realize both the provision of solutions to customers and the enhancement of development efficiency.

  • How do you envisage earnings in FY2017? Which is more likely: sales growth or an improvement in profitability?

    As we are currently in the process of preparing our budgets, we would prefer to comment on this once we announce our full-year business results in April. It can take a long time for the acquisition of POR* to lead to sales, but we have obtained POR and believe there is no pessimistic news.

  • If 3D NAND investment rises in CY2016, will there be an increase in the earnings of TEL for FY2017 even if the WFE market remains flat, as TEL has etch systems and deposition systems?

    The expectation that 3D NAND investment will grow is one of the reasons why we believe there will be no negative factors in our earnings for FY2017.

  • Will your view that cash on hand of around 250 billion yen is an appropriate level change with respect to FY2017?

    At present, we see 250 billion yen as appropriate.

  • Are you considering engaging in M&A or collaboration with a Japanese semiconductor production equipment maker?

    We will not rule out the possibility but we will examine it prudently. We intend to be a company that creates value that can address wide-ranging technological needs. Therefore, first of all we will manage the ability to share assets based on technological know-how within TEL. We cannot rule out the possibility of M&A as one of the methods when proposing greater-than-expected solutions to customers’ issues. We should think positively about what is required to achieve the Medium term Management Plan, and not limit our considerations to Japanese manufacturers.

  • What is your strategy in regard to the integration of Lam Research and KLA-Tencor?

    In relation to the synergies between the two companies, we believe that we have our own strategies that are competitive enough. Moreover, we will be able to consider partnerships in all directions, as necessary, including other testing and inspection equipment manufacturers.

* POR (Process of Record): Certification of the adoption of equipment in customers' semiconductor production processes.

* The above content is a summary of question and answers session.