Earnings Release

3Q FY2017 Earnings Release Conference Q&A

  • In the October-December period of 2016, there were many SPE orders in Korea. Can you give us the details by application and by product?

    We received orders from Korean customers in all of our product categories. For DRAM, share improvements in patterning through technologies combining multiple etching steps contributed. We also received many NAND-related orders thanks to penetration for new processes in 3D NAND.

  • SPE orders from Taiwan have been continuing at high levels for a while. What is the forecast going forward?

    Taiwan is one of the largest markets, and we expect the high level of incoming orders to continue, with memory and foundry-related orders staying balanced.

  • You explained the trends in incoming orders by application in the comparison between orders for July-December 2016 and January-June 2017. What are you seeing in terms of order value?

    There is not a great deal of difference. We foresee growth of 10% or more in the WFE* market during CY2017, with a continued high level of incoming orders.

  • SPE orders during the October-December period of 2016 were at a record level. Do you think you will be able to beat that in the next 12 months?

    We do not envisage that the level of orders in the October-December period will continue, but we believe that relatively strong demand will be maintained given year-on-year growth of more than 10% in the WFE market for CY2017.

  • What is the outlook for FPD orders in CY2017?

    We expect last year's relatively high levels to continue.

  • What, if any, are the factors that may cause an upward shift in the size of the WFE market in CY2017?

    Although our customers' investment plans for October-December period of 2017 are not yet finalized, there is likely to be an upward trend in all applications. We can expect our customers to invest steadily in 3D NAND in the medium-to-long term.

  • You say that you expect production capacity of 3D NAND to reach 700,000 wafers per month by end of CY2017. Do these figures take into account the supply capacity of wafer manufacturers?

    The figures were calculated based on our estimates by using customers' investment plans for reference.

  • Do you expect to see investment in DRAM and NAND by local Chinese manufacturers from the second half of CY2017 onward?

    Both DRAM and NAND investment will probably ramp up in 2018.

  • We believe factory utilization rates are currently rather high, but given the fact that forecasts for the current fiscal year remain unchanged, are you expecting an increase in fixed costs and a downturn in profitability?

    That is something that we are not anticipating.

  • If the WFE market grows by 10% or more in CY2017, it is likely that the assumption on the scale of the market ($37 billion) used in the financial model for the medium term business plan will be exceeded. Is there a possibility that you will achieve its targets in FY2018?

    For the sake of future growth, we are using R&D expenses for 3D NAND, etc., and adopting a two-pronged approach of curtailing increases in fixed costs while improving our marginal profit ratio. Given our fixed costs at the market's current size, we are moving ahead to build a production system that will enable us to handle a market size of $37 billion or more.

  • For the past three years, the gross profit margin has continued to be around 40%. Aren’t you still expecting to see improvements next year and beyond?

    We are working to improve both gross margins and operating margins as indicated in the medium term business plan, and we plan to achieve our targets by the fiscal year ending in March 2020.

  • What are your company's capital investment plans for the next fiscal year and beyond? Do you have plans to build any new factories?

    There are no plans to build new factories at the present time. We will continue to raise productivity and control fixed costs in order to achieve the targets in the medium term business plan.

  • What kind of impact do you expect the use of EUV (Extreme Ultra-Violet) in mass production to have on your company? What do you think will happen to the profitability of coater/developers?

    Tokyo Electron enjoys an extremely high market share in coater/developers, and any increase in the number of shipments of EUV exposure equipment would also expand our business opportunities. The more sophisticated the level of technology demanded, the higher the added value of the equipment will become.

* WFE (Wafer Fab Equipment): The semiconductor production process can be divided into two sequential sub-processes: front-end (wafer fabrication) and back-end (assembly and test) production. WFE is used in the front-end production process

* This is a summary of questions and answers.