Q4 FY2022 Earnings Release Conference Q&A
For WFE as a whole, we expect positive growth YoY. By application, in light of the ongoing digital shift of society, solid investment is expected for logic/foundry in both leading-edge and mature generations. DRAM investment is already at a high level due to the significant growth in CY2021. We expect positive growth to continue in CY2023.
We believe that the WFE market is still at an early stage of the growth. Driven by IoT, AI, 5G, and the metaverse, the demand for semiconductors will expand even more. Looking at the technology roadmap for the next 5 to 10 years, technological innovation will continue, and semiconductor manufacturers will invest aggressively to meet market needs. Although in the short term, we have to pay close attention to issues such as the geopolitical situation, we will continue to create high-value-added Next Generation Products without being shortsighted.
Technological innovation in the semiconductor production equipment industry advances quickly, so there is always demand for higher-performance equipment. TEL is continuously introducing new high-value-added products to this market. Adoption of these products is progressing and steadily increasing their share of net sales, which leads to a higher gross profit margin.
Our outlook is that WFE investment will increase into the second half of CY2022. In conjunction with this, new equipment sales are also forecast to increase toward the second half of FY2023. Although we will need to continue paying close attention to our component procurement, that has nothing to do with balance in our sales between the first and second half.
The YoY decrease in new equipment sales for DRAM in FY2023 is mainly due to differences between fiscal year and calendar year.
We raised our outlook for the CY2022 WFE market because there have been additional investments in leading-edge logic. In conjunction with this, we increased our forecast for FY2023 new equipment sales from the late first half through the second half compared to three months ago.
We believe this is an appropriate forecast at the present time. In FY2022, the increase in modification sales contributed to a growth in Field Solutions sales. It is difficult to forecast how much modification sales will grow in FY2023, so we created our financial estimates based on inquiries with high visibility only. Please note that we are forecasting that parts and services sales will increase steadily.
The new buildings in Kumamoto and Miyagi are both for R&D purposes, and will thus not contribute to increases in our production capacity. Looking ahead to future technological needs, we will accelerate R&D through these new buildings to capture more business opportunities.
It’s true that construction costs are higher than for previous production buildings. That is because we are planning to install state-of-the-art facilities for clean rooms and anti-earthquake structures, etc. for development and evaluation purposes.
Yes, we do. We will meet the strong demand from our customers by improving production efficiency, etc.
We have acquired many of new PORs*2 for each of our products. Sales of deposition systems increased approximately 70% YoY in CY2021. Etch systems increased market share in NAND. Furthermore, in terms of cleaning systems, the adoption of cleaning equipment with supercritical drying capability in mass production contributed to the increase in market share. These factors resulted in a YoY increase in WFE share of approximately 15%.
We are introducing high-value-added products and aiming to increase our market share in our current areas of business. At the same time, there is no change in our approach of deploying products in areas where we can leverage our expertise and strengths developed as a leading company in the industry. We see a variety of business opportunities along with the technology roadmap. We intend to expand our business into any area in which our customers have needs and for which only we can create one-of-a-kind products.
We are able to communicate closely with our suppliers because most of them have sites near our plants. Furthermore, to ensure that our entire supply chain can respond to increases in demand, we hold production update briefings every six months at all of our plants at which we share information on long-term market trends with our suppliers. Furthermore, our Corporate Production Division, which we established in September of 2021, is working hard to address the current component shortage. Components with procurement risks are reviewed frequently by top management and plant managers, etc.
Coolant liquids are mainly procured by our customers from supply sources. At present, we understand that customers’ investment plans have not been changed due to such procurement concerns.
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.
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.