Could you talk about the market size for each application in relation to the CY2019 WFE*1 market forecasts by application shown on page 15 of the presentation materials?
At this point, we believe that 60% of the total WFE market will be for logic and logic foundries and 40% for memory.
What is the outlook for investment by Chinese memory manufacturers in the CY2019 WFE market? To what extent will there be an impact from US-China trade friction?
The impact of US-China trade friction is beginning to be felt, and Chinese customers are revising their investment plans. Regarding the specific impacts, this is a political topic and therefore we will refrain from commenting on this.
We intend for CY2019 to be a year to firmly strengthen our system to meet future semiconductor demand, leading to the medium- to long-term growth of TEL.
Regarding the WFE market outlook, which applications do you expect to recover in the second half of CY2019?
Although investment in WFE is being curtailed in the first half, we expect it to recover in the second half.
We can expect stable investment both in the first half and the second half in logic, where pilot investments are starting for the next generation.
Regarding DRAM, although at this point our forecast is expecting investment only in miniaturization, we expect that demand will recover due to factors such as the commercialization of 5G, the recovery in investment in data centers due to the drop in DRAM prices, and the gradual resolution of shortages in the supply of MPU.
Could you talk about the outlook for investment in increased production capacity of memory? Regarding DRAM, it was mentioned in the Q&A session earlier that there was a possibility for recovery in the second half of CY2019. Does it look like NAND will require even more time to recover than DRAM?
At this point we do not know which one will recover first, since it will depend on the decisions of customers.
In CY2019, about how much do you think that DRAM bit supply capacity will increase? Does the fact that a second-half recovery is not anticipated for DRAM in the current WFE forecast mean that you think the bit demand will continue to fall below supply?
We think that bit demand will be growing reliably at about 20% in DRAM and 40% in NAND. With regard to the timing of the recovery of customer investment, factors such as customer strategy and macroeconomic conditions will have an impact, so we intend to keep a close eye on trends through communication with our customers.
Can you tell us about the forecast of 25% year-on-year growth in the WFE market for logic and logic foundries in CY2019? There are concerns that the market for WFE excluding EUV-related equipment will contract due to the introduction of EUV. Do you think that the equipment markets that TEL is focusing on will grow, even taking the introduction of EUV into consideration?
As a basic strategy, we are aiming at outperforming the overall WFE market by focusing on areas where we can utilize the technologies that we have, where technological innovation is expected to continue, and in which market expansion can also be anticipated.
As logic and logic foundries customers move towards the 7nm/5nm generations and further miniaturization, co-optimization of continuous processes of etching, deposition, and cleaning is becoming important for improving yields, and the added value of our company, which has these products, is also increasing.
What is behind your view that the production equipment market for FPD TFT array process*2 will recover from the second half of CY2019?
Although the demand for large-sized flat panels is relatively high, there are also impacts from macroeconomic conditions and US-China trade friction, and some investment plans are being revised. We expect the investment plans to become fixed in the second half of the year.
What is the status of shipments for scheduled sales in Q4 FY2019?
60% of the Q4 scheduled sales of new SPE equipment listed on page 20 of the presentation materials are already being shipped.
In the industry, it is being said that investments are being pushed back even further in memory. Why is the percentage of sales by application in the second half of FY2019 expected not to change very much from the outlook when your Q2 results were released?
The impact on our FY2019 earnings is likely to be limited. We also consider the fact that we have adopted the standard for recording sales not at the time of shipment but rather when the set-up and testing are complete to be one of the factors why the outlook is unchanged. We see sales increasing in Q4 for memory and for logic (in Europe and North America).
Q4 field solutions (FS) business sales are forecast to decrease, if calculated on the basis of full-year sales forecasts for the FS business. What is behind this decrease?
The rate of progress for the full-year sales forecasts for the FS business was 77% in the cumulative total for Q1 through Q3. The FS business is performing well, and we do not think that the business will suddenly lose its momentum.
What is the outlook for FS business sales in FY2020? Can we expect the FS business to grow even if the WFE market will decrease year-on-year?
The FS business is growing steadily, primarily in parts sales, and we expect this trend to continue in FY2020 as well.
As the WFE market will decrease in CY2019, could you tell us about how you see the profitability targets listed in the financial model of the Medium-term Management Plan? I believe that development investment projects have been increasing, but do you intend to control SG&A expenses and other costs in FY2020?
The financial model for FY2021 is shown in the Medium-term Management Plan, and there are still about two years remaining. We expect there to be medium- to long-term market growth in FY2021 and beyond, and we intend to capture this growth.
With regard to research and development, although we will be selecting projects after careful consideration, the concept of our management team is that we would like to keep a positive stance without missing out on any important developments. The basic strategy concerning growth investment including personnel and scaling up production capacity is expected to remain unchanged in FY2020 as well.
As far as what level of profitability we are aiming for in FY2020, we consider it to be one critical challenge we must address formulating the budget. We will do our best to present a profitability forecast that can meet expectations.
*1 WFE (Wafer fab equipment): The semiconductor production process is divided into front-end production, in which circuits are formed on wafers and inspected, and back-end production, in which wafers are cut into chips, assembled and inspected again. Wafer fab equipment refers to the production equipment used in front-end production and in wafer-level packaging production
*2 TFT array process: The processes of manufacturing the substrates with the electric circuit functions that drive displays
* The above content is a summary of question and answers session.