FY2012 Financial Announcement meeting Q&A

What is the outlook for orders in the April to June 2012 quarter? Also, what are the trends by application?

We expect orders for SPE in the April to June quarter to be approximately 100 billion yen, the same level as the January to March quarter. We also expect the trends by application to be generally the same as during the January to March quarter. The memory ratio will remain in the 20% to 30% range. With respect to FPD/PV, we expect orders to be in the 5 billion yen to 10 billion yen range.

What is the outlook for SPE orders in the July to September quarter and thereafter? Also, what are the trends by application?

We expect orders to bottom out in the April to June quarter and then to gradually increase, with an increase of about 30% in the second half of the fiscal year. We expect to receive orders from NAND as well as logic device and foundry customers. We do not anticipate a recovery of DRAM.

What product will act as a driver in the SPE market this fiscal year?

Not unexpectedly, smartphones will be the key driver. New logic device compatible with LTE (a high-speed data communications standard for next-generation mobile phones) and NAND will drive investment.

Concerning trends in profitability by segment for the fiscal year ending March 2013, you predict that operating income will be down by approximately 13 billion yen compared to the fiscal year ended March 2012. Will all of the decrease come from the FPD business?

The bulk of the decrease in operating income will be caused by a loss in the FPD business.

How much effect will the FPD business reorganization have in the current fiscal year?

We are unable to give specific amounts, but we have reallocated some resources including personnel to new businesses such as OLED and SPE growth fields such as 3DI. We are working to create structures that can generate profits from coater/developers, for which we cannot gain an edge over our competitors in terms of technology.

You recently made two announcements concerning mergers and acquisitions. What is your approach to cash management? How will you manage cash over the medium term including your approaches to the scale of funds used for M&A, share buybacks, and dividends?

As we have indicated in the past, our highest priority is providing returns to shareholders through growth. As long as technological innovation continues, we will prioritize growth investment. We are always considering M&A, both in Japan and overseas, in cases where other companies have appealing technologies that we do not have. The acquisitions of NEXX Systems. and Oerlikon Solar are a part of that strategy. We are also constantly considering shareholder returns including share buybacks and dividends. We increased fixed dividends payout ratio from 20% to 35% at the end of the fiscal year ended March 2011, and we plan to add a 20 yen commemorative dividend for the fiscal year ending March 2013 to celebrate the 50th anniversary of TEL's establishment. We plan to actively provide shareholder returns in the future when opportunities are available.

With the acquisition of NEXX Systems and other developments, TEL is focusing on the wafer level packaging (WLP) market. Can you discuss the competitive environment including the market environment and the superiority of TEL equipment in detail?

The TSV etch system has been delayed by about two years, but growth in the bonder/debonder business is ahead of schedule. We expect WLP-related sales to exceed 10 billion yen this fiscal year. When the TSV business gets up to speed in about two years, we expect sales to be 20 billion yen to 30 billion yen.

What is the competitive environment for NEXX's electrochemical deposition (ECD) equipment, and how is the equipment superior?

Market share is currently below 20%. We believe that NEXX Systems is ahead of the competition in terms of productivity, and as a result, we have high expectations for the future.

When will the acquisitions of Oerlikon Solar and NEXX Systems be completed? Also, what are the two companies' operating profit margins?

It will depend on the pace of regulatory approval in each country, but we expect to close the acquisition of NEXX Systems in May and of Oerlikon Solar in around June or July. It will be difficult for Oerlikon Solar to become profitable in the short term, and NEXX's contributions to profits are not high in this year, but we believe that both companies will contribute to our target operating profit margins over the medium to long term.

Are thin-film silicon solar modules superior to crystalline solar cells?

We believe that Oerlikon Solar's technology is the world's best because of its ability to achieve vastly lower manufacturing costs for large-scale power generation projects such as mega solar plants. By steadily carrying out the technology roadmap proposed by Oerlikon Solar, we expect to achieve grid parity in the near future, and the solar cell market will grow rapidly.